Put Your Money Where Your Mouth Is: The Importance of Company Focus When Personalizing Investor Communication

Abstract

Technology has made direct personal communication between companies and individual investors feasible. While advertisers and others have used personalization to make their messages more impactful, little is known about the potential impact of personalization on investor judgment. We study the impact of personalized communication on investor judgment. We find that personalized communication is most effective when sent by a company that has demonstrated a longer-term focus. When prospective investors receive personalized communication, they are more likely to recognize the relative focus of the sending company and to find a company with greater investment in long-term prospects more attractive. In other words, personalized communication impacts the way prospective investors interpret financial information, to the benefit of firms with a longer-term focus.

Keywords: investor communication, personalized communication, social media