Public Disclosure of Private Meetings: Does Observing Peers’ Information Acquisition Affect Analysts’ Attention Allocation?

Abstract

We investigate the impact of observing peers’ information acquisition decisions on financial analysts’ own allocation of attention. Using the timely disclosure mandate by the Shenzhen Stock Exchange as a setting, we find that, when analysts observe that a firm has been visited by other analysts, they pay less attention to that firm. This finding is consistent with the conjecture that the timely disclosure reveals the relative information advantage of visiting analysts, leading nonvisiting analysts to reallocate their limited attention and resources. We find that the reduction in nonvisiting analysts’ attention not only occurs shortly after a visit but also persists over the long term. Further evidence suggests that the timely disclosure has positive externalities in the form of increased attention and improved information environment for nonvisited peer firms.

Keywords: attention allocation, informational efficiency, corporate site visits, externalities

JEL Classification: G24, G14, M41