50 Pages Posted: 16 Nov 2011 Last revised: 14 Mar 2015
Date Written: March 2015
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: 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
By Alex Edmans
By Michael Tang