Behind Closed Doors: Selective Disclosure in Private Meetings

44 Pages Posted: 1 Sep 2021 Last revised: 24 Feb 2024

See all articles by H. Scott Asay

H. Scott Asay

University of Iowa - Department of Accounting

Shana Clor-Proell

Texas Christian University - Department of Accounting

Michael T. Durney

University of Iowa

Date Written: February 22, 2024

Abstract

We examine investor relations officers’ (IROs) disclosure decisions in private meetings with investors. In these settings, IROs face conflicting pressures to maintain a “level playing field” for all investors while also catering to investors. We experimentally test how pre-disclosure materiality consideration, recommended by professional standards, affects disclosure to more and less preferred investors. Across two experiments, a total of 273 experienced IROs respond to hypothetical investor questions. We find direct evidence of selective disclosure to more preferred investors. Further, and contrary to Regulation Fair Disclosure and professional standards, we find that materiality consideration dampens overall disclosure but does not reduce, and may even exacerbate, selective disclosure to preferred investors. Supplemental data indicates that IROs are more likely to provide preferred investors with private access to the CEO, and professional investors believe this access provides even more useful investment information. Our results have implications for firms and regulators.

Keywords: Regulation Fair Disclosure; investor relations; private disclosure; materiality

JEL Classification: G23; M41; M48; M49

Suggested Citation

Asay, Hamilton Scott and Clor-Proell, Shana and Durney, Michael Thomas, Behind Closed Doors: Selective Disclosure in Private Meetings (February 22, 2024). Available at SSRN: https://ssrn.com/abstract=3914167 or http://dx.doi.org/10.2139/ssrn.3914167

Hamilton Scott Asay (Contact Author)

University of Iowa - Department of Accounting ( email )

S232 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Shana Clor-Proell

Texas Christian University - Department of Accounting ( email )

M.J. Neeley School of Business
TCU Box 298530
Fort Worth, TX 76129
United States

Michael Thomas Durney

University of Iowa ( email )

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

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