Managers’ Private Disclosures: Descriptive Evidence and the Effect of Audience Size

50 Pages Posted: 23 Oct 2019 Last revised: 10 Jun 2023

Date Written: April 23, 2023

Abstract

A burgeoning literature documents the informativeness of managers’ private meetings with investors. Yet, we know very little about what occurs behind those closed doors. I provide survey and experimental evidence to shed light on managers’ disclosures in private meetings with investors. I conduct two surveys with a total of 188 investor relations officers (IROs) on their private disclosure experiences to provide descriptive evidence about (a) the frequency and audience size of private meetings of various types, (b) IROs’ perceptions about private disclosure content determinants and the differences between public and private disclosures, and (c) IROs’ experiences with private disclosure of material information, contrary to Regulation Fair Disclosure. In contrast with predictions based on psychology theory, IROs claim private meeting audience size does not affect disclosure content. However, an experiment with 328 experienced managers finds that less bad news is disclosed to larger versus smaller audiences and this effect disappears with increased visualization of the audience. Thus, the effect of audience size on disclosure content, of which IROs appear largely unaware and even assert should not be occurring, can be prevented with increased visualization of the audience. Additional analyses further investigate the process of this effect. Implications for IROs and regulators are discussed.

Keywords: Private disclosure; selective disclosure; Regulation Fair Disclosure; investor relations; voluntary disclosure

JEL Classification: G23; M41; M48; M49

Suggested Citation

Durney, Michael Thomas, Managers’ Private Disclosures: Descriptive Evidence and the Effect of Audience Size (April 23, 2023). Available at SSRN: https://ssrn.com/abstract=3469816 or http://dx.doi.org/10.2139/ssrn.3469816

Michael Thomas Durney (Contact Author)

University of Iowa ( email )

341 Schaeffer Hall
Iowa City, IA 52242-1097
United States

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