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

The North American Journal of Economics and Finance, Volume 58, 2021, 101481, ISSN 1062-9408, https://doi.org/10.1016/j.najef.2021.101481.

45 Pages Posted: 27 Feb 2021 Last revised: 7 Sep 2022

See all articles by Huan Cai

Huan Cai

Cornell College

Zhen QI

Guangzhou University - School of Economics and Statistics

Date Written: April 28, 2021

Abstract

Using a manually 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 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. In particular, we show 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. These results are robust regardless of whether the analyst attend meetings or whether the meeting is hold onsite, providing further evidence that private conversations with managers may be a more effective information channel than observing firms’ operations during site visits.

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 (April 28, 2021). The North American Journal of Economics and Finance, Volume 58, 2021, 101481, ISSN 1062-9408, https://doi.org/10.1016/j.najef.2021.101481., Available at SSRN: https://ssrn.com/abstract=3732509 or http://dx.doi.org/10.2139/ssrn.3732509

Huan Cai (Contact Author)

Cornell College ( email )

United States

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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