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What Are We Meeting For? The Consequences of Private Meetings with Investors

50 Pages Posted: 16 Nov 2011 Last revised: 14 Mar 2015

David H. Solomon

Boston College - Carroll School of Management

Eugene F. Soltes

Harvard Business School

Date Written: March 2015

Abstract

Using a unique dataset of all one-on-one meetings between senior management and investors for an NYSE-traded firm, we investigate the impact of these private meetings on investor decisions. We find evidence that investors who meet privately with management make more informed trading decisions in periods when they meet, increasing their position before periods of high returns and decreasing their positions before periods of low returns. This improved timing ability is concentrated in hedge funds, and does not appear to be driven by fixed investor skill, investors communicating with each other, or investors endogenously choosing to meet simply when they have pre-existing private information. The increase in timing ability is larger during periods of greater uncertainty and more public information availability, consistent with a mosaic theory of investing. Our results suggest that, despite the passage of Regulation Fair Disclosure, private meetings help a subset of investors make more informed trading decisions.

Suggested Citation

Solomon, David H. and Soltes, Eugene F., What Are We Meeting For? The Consequences of Private Meetings with Investors (March 2015). Journal of Law and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1959613 or http://dx.doi.org/10.2139/ssrn.1959613

David H. Solomon

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Eugene F. Soltes (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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