Non-Deal Roadshows, Informed Trading, and Analyst Conflicts of Interest
2020 AFA San Diego Meetings Paper
103 Pages Posted: 3 Jan 2019 Last revised: 14 May 2021
Date Written: January 31, 2021
Non-deal roadshows (NDRs) are private meetings between management and institutional investors, typically organized by sell-side analysts. We find that around NDRs, local institutional investors trade heavily and profitably, while retail trading is significantly less informed. 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 a substantial information advantage for 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: Suggested Citation