Investor Conferences, Stock Liquidity, and Firm Performance
University of Maryland-College Park
February 1, 2015
We examine potential costs and benefits for firms that participate in investor conferences. We find that firms participating in conferences experience a 1.4% to 2.8% increase in stock liquidity compared to matched, non-conference-participating firms. This improvement in liquidity is larger for firms with low pre-conference visibility, decreases with the number of conference presentations in a quarter, and varies predictably with conference characteristics that affect the ability of investors to update their priors about the firm. In contrast to the positive impact on liquidity, we find that conference activity has a negative impact on firms’ operating performance. Nevertheless, we show that conference activity increases firm value because it reduces liquidity risk and the cost of equity capital.
Number of Pages in PDF File: 69
Keywords: Conference Presentations, Liquidity Risk, Cost of Equity Capital
JEL Classification: G10, G14
Date posted: January 31, 2011 ; Last revised: February 7, 2015