Private Communication between Managers and Financial Analysts: Evidence from Taxi Ride Patterns in New York City

Abstract

This study constructs a novel measure that aims to capture face-to-face private communications between firm managers and sell-side analysts by mapping detailed, large-volume taxi trip records from New York City to the GPS coordinates of companies and brokerages. Consistent with earnings releases prompting the need for private communications, we observe daily taxi ride volumes between companies and brokerages increase around earnings announcement dates (EAD). We find that the increase in ride volumes following EAD is negatively associated with analysts’ earnings forecast errors, with a more pronounced association when earnings announcements are bundled with more public disclosures. In contrast, the increase in ride volumes before EAD explains analysts’ downward adjustment of near-term earnings forecasts to create small positive earnings surprises. Taken together, our results suggest that analysts may learn different information depending on the timing and context of in-person meetings, which help them convey the company’s message to the investment community.

Keywords: Private Communications, Sell-Side Analysts, Taxis, Private Information, Earnings Forecasts, Stock Recommendations, Profitability of Stock Recommendations, Earnings Announcements, Reg FD

JEL Classification: G00, G14, G18, G24, G28, G30, G38, M10, M40, M41, M48