Managing the Demand for Information from Institutional Investors through Private In-house Meetings

55 Pages Posted: 11 Jul 2017 Last revised: 7 May 2019

See all articles by Robert M. Bowen

Robert M. Bowen

Univeristy of San Diego - School of Business; University of Washington - Foster School of Business; Foster School of Business ; University of San Diego - Department of Accountancy

Shantanu Dutta

The University of Ontario Institute of Technology (UOIT)

Songlian Tang

East China University of Science and Technology (ECUST)

PengCheng Zhu

University of San Diego

Date Written: May 2, 2019

Abstract

The Shenzhen Stock Exchange (SZSE) in China is unique worldwide in requiring disclosure of the timing, participants and selected content of private in-house meetings between firm managers and outside investors. We investigate whether managers host these private meetings to strategically influence mutual funds – the primary group of institutional investors in China. Using a large hand-collected dataset, we find that mutual funds with relatively large ownership in the hosting firm have more access to private in-house meetings. We also find that firms use private in-house meetings to disseminate negative news to mutual funds with relatively large ownership and, as a result, experience lower stock price volatility. This result suggests that managers may prefer to disclose negative developments to select institutional investors in a private setting – possibly to manage the news, minimize stock sell-offs and mitigate stock return volatility. In addition, we find mutual funds with large ownership (i) interact more often with top management, (ii) attend more exclusive meetings; and (iii) have longer meetings with hosting firms. Overall, our results suggest that mutual funds get preferential treatment depending on their ownership level, and hosting firms strategically organize their private in-house meetings to smooth stock return volatility.

Keywords: institutional investors, mutual funds, private meetings, site visits, disclosure, stock volatility

JEL Classification: G20, G23, M41

Suggested Citation

Bowen, Robert M. and Dutta, Shantanu and Tang, Songlian and Zhu, Phil, Managing the Demand for Information from Institutional Investors through Private In-house Meetings (May 2, 2019). Available at SSRN: https://ssrn.com/abstract=2997349 or http://dx.doi.org/10.2139/ssrn.2997349

Robert M. Bowen

Univeristy of San Diego - School of Business ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

HOME PAGE: http://https://www.sandiego.edu/business/undergraduate/accountancy/biography.php?profile_id=1799

University of Washington - Foster School of Business ( email )

Box 353226
University of Washington
Seattle, WA 98195-3226
United States

HOME PAGE: http://https://foster.uw.edu/faculty-research/directory/robert-bowen/

Foster School of Business ( email )

557 Paccar Hall
Seattle, WA 98195
United States
(206) 543-4569 (Phone)
(206) 685-9392 (Fax)

HOME PAGE: http://faculty.washington.edu/rbowen/

University of San Diego - Department of Accountancy ( email )

223 Olin Hall
5998 Alcalá Park
San Diego, CA 92110
United States
619.260.2385 (Phone)

HOME PAGE: http://www.sandiego.edu/business/directory/biography.php?id=1232

Shantanu Dutta

The University of Ontario Institute of Technology (UOIT) ( email )

2000 Simcoe Street North
Oshawa, Ontario L1H 7K4
Canada

Songlian Tang

East China University of Science and Technology (ECUST) ( email )

Shanghai
China

Phil Zhu (Contact Author)

University of San Diego ( email )

5998 Alcala Park
San Diego, CA 92110
United States

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