Private Conversation Matters: Evidence from Sell-side Analyst Reports after Private Meetings

43 Pages Posted: 27 Feb 2021

See all articles by Huan Cai

Huan Cai

Shantou University - Business School

Zhen QI

Guangzhou University - School of Economics and Statistics

Date Written: May 30, 2020

Abstract

Using a hand-collected database of Shenzhen Stock Exchange listed firms from 2013 to 2015, we examine the key characteristics of firms’ private meetings and their effects on analysts’ reports. We find that the short-term earnings forecast is more accurate and less optimistic during hosting periods after these meetings in general, but recommendations are still biased upwardly, even after the Fair Disclosure Regulation change in 2012. These results are robust regardless of whether the analyst attend meetings or whether the meeting is hold onsite so that analysts can observe the firm’s operations. We also investigate various aspects of private conversations in meetings, and show that the presence of managers, a smaller number of meeting participants, and discussing questions in more categories are associated with more accurate and less optimistic short-term forecasts during the hosting periods following the meeting. Our results suggest that private and small group conversations between managers and analysts can be significant information channels in these meetings.

Keywords: Private meetings, Private conversations, Meeting characteristics, Analyst forecast, Information channels, Management access.

JEL Classification: G14, G18, G23, G41.

Suggested Citation

Cai, Huan and QI, Zhen, Private Conversation Matters: Evidence from Sell-side Analyst Reports after Private Meetings (May 30, 2020). Available at SSRN: https://ssrn.com/abstract=3732509 or http://dx.doi.org/10.2139/ssrn.3732509

Huan Cai (Contact Author)

Shantou University - Business School ( email )

China

Zhen QI

Guangzhou University - School of Economics and Statistics ( email )

Guangzhou Higher Education Mega Center
Waihuanxi Road 230
Guangzhou, Guangdong 510006
China

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