Shall We Talk? The Role of Interactive Investor Platforms in Corporate Communication

55 Pages Posted: 4 Nov 2020 Last revised: 22 Jul 2022

See all articles by Charles M.C. Lee

Charles M.C. Lee

Foster School of Business, University of Washington; Stanford University - Graduate School of Business

Qinlin Zhong

Fudan University-the School of Management

Date Written: July 21, 2022

Abstract

Between 2010 and 2017, Chinese investors used an investor interactive platform (IIP) to ask public companies around 2.5 million questions, the vast majority of which received a reply within two weeks. We analyze these IIP dialogues using a BERT-based algorithm and provide preliminary evidence on their causes and consequences. Our analyses show most questions reflect investors’ difficulties in processing information already in the public domain. Controlling for other news, higher IIP activity is associated with increases in trading volume, return volatility, market liquidity, and price informativeness as well as decreases in bid-ask spread. Financial statement-related postings increase around the adoption of new accounting standards. Collectively, our results show that investors face significant information processing costs but that IIP activities help reduce these costs, leading to improvements in stock price formation.

Keywords: corporate disclosure, investor relations, information processing costs, interactive communication, market liquidity, price informativeness

JEL Classification: M41, M45, G14, G15, G39

Suggested Citation

Lee, Charles M.C. and Zhong, Qinlin, Shall We Talk? The Role of Interactive Investor Platforms in Corporate Communication (July 21, 2022). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3694637 or http://dx.doi.org/10.2139/ssrn.3694637

Charles M.C. Lee (Contact Author)

Foster School of Business, University of Washington ( email )

224 Mackenzie Hall, Box 353200
Seattle, WA 98195-3200
United States

Stanford University - Graduate School of Business

Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-5015
United States

Qinlin Zhong

Fudan University-the School of Management ( email )

Shanghai, 100045
China

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