Behind Closed Doors: An Investigation of Investor Relations Officer Disclosures in Private Meetings with Investors

45 Pages Posted: 1 Sep 2021 Last revised: 4 Oct 2021

See all articles by H. Scott Asay

H. Scott Asay

University of Iowa - Department of Accounting

Shana Clor-Proell

Texas Christian University - Department of Accounting

Michael T. Durney

University of Iowa

Date Written: September 30, 2021

Abstract

We examine how investor relations officers (IROs) approach disclosure decisions in private meetings with investors. We provide a framework that describes the conflicting pressures that IROs face in these settings and factors that might influence private disclosure. Then we conduct an experiment to test a portion of this framework, focusing on the effects of investor types and pre-disclosure preparation. In the experiment, 133 experienced IROs evaluate information that is “gray” with respect to its materiality. We find that greater pre-disclosure preparation leads IROs to recognize the “gray area” and provide more disclosure to more preferred investors than to less preferred investors. In contrast, we find that, when IROs do less pre-disclosure preparation, they limit disclosure to both investor types. We also find that IROs rationalize not providing preferential disclosure to preferred investors after the fact through higher materiality assessments and by increasing reference to Reg FD as constraining their disclosure. Our results have implications for firms and regulators.

Keywords: Regulation Fair Disclosure; investor relations; private disclosure; materiality

JEL Classification: G23; M41; M48; M49

Suggested Citation

Asay, Hamilton Scott and Clor-Proell, Shana and Durney, Michael Thomas, Behind Closed Doors: An Investigation of Investor Relations Officer Disclosures in Private Meetings with Investors (September 30, 2021). Available at SSRN: https://ssrn.com/abstract=3914167 or http://dx.doi.org/10.2139/ssrn.3914167

Hamilton Scott Asay (Contact Author)

University of Iowa - Department of Accounting ( email )

S232 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

Shana Clor-Proell

Texas Christian University - Department of Accounting ( email )

M.J. Neeley School of Business
TCU Box 298530
Fort Worth, TX 76129
United States

Michael Thomas Durney

University of Iowa ( email )

341 Schaeffer Hall
Iowa City, IA 52242-1097
United States

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