Non-Deal Roadshows, Investor Welfare, and Analyst Conflicts of Interest

2020 AFA San Diego Meetings Paper

60 Pages Posted: 3 Jan 2019 Last revised: 7 Jan 2020

See all articles by Daniel Bradley

Daniel Bradley

University of South Florida

Russell Jame

University of Kentucky - Gatton College of Business and Economics

Jared Williams

University of South Florida

Date Written: November 20, 2018

Abstract

Non-deal roadshows (NDRs) are private meetings between management and institutional investors, typically organized by analysts. We find that around NDRs, local institutional investors trade heavily and profitably, while retail trading is significantly less informative. Analysts who sponsor NDRs issue significantly more optimistic recommendations and target prices, coupled with more “beatable” earnings forecasts, consistent with analysts issuing strategically biased forecasts in order to win NDR business. Our results suggest that NDRs result in wealth transfers from small retail investors to large institutional investors and create significant conflicts of interests for the analysts that organize them.

Keywords: non-deal roadshows, investor welfare, analyst conflicts of interest, private meetings

JEL Classification: G20, G23

Suggested Citation

Bradley, Daniel and Jame, Russell and Williams, Jared, Non-Deal Roadshows, Investor Welfare, and Analyst Conflicts of Interest (November 20, 2018). 2020 AFA San Diego Meetings Paper. Available at SSRN: https://ssrn.com/abstract=3302687 or http://dx.doi.org/10.2139/ssrn.3302687

Daniel Bradley (Contact Author)

University of South Florida ( email )

Tampa, FL 33620
United States

Russell Jame

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

HOME PAGE: http://russelljame.com

Jared Williams

University of South Florida ( email )

Tampa, FL 33620
United States

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