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

61 Pages Posted: 13 Sep 2021 Last revised: 6 Jun 2022

See all articles by Stacey Choy

Stacey Choy

University of Toronto - Rotman School of Management

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Date Written: June 6, 2022

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 needs for private communications, we observe that daily taxi ride volumes between companies and brokerages increase significantly around earnings announcement dates (EAD) and reach their peak on EAD. After controlling for an extensive set of fixed effects (firm, analyst, year, and firm-broker) and other potential confounding factors, we find that increases in ride volumes around EAD are negatively associated with analysts’ earnings forecast errors in periods after EAD and positively associated with the profitability of recommendations issued after EAD (but these effects dissipate over longer horizons). Taken together, our results suggest that analysts may obtain a private source of information orthogonal to their pre-existing information from these in-person meetings, which may help them better understand the implications of current earnings signals for future earnings.

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

Suggested Citation

Choy, Stacey and Hope, Ole-Kristian, Private Communication between Managers and Financial Analysts: Evidence from Taxi Ride Patterns in New York City (June 6, 2022). Rotman School of Management Working Paper No. 3920680, Available at SSRN: https://ssrn.com/abstract=3920680 or http://dx.doi.org/10.2139/ssrn.3920680

Stacey Choy

University of Toronto - Rotman School of Management ( email )

Toronto, Ontario
Canada

HOME PAGE: http://www.rotman.utoronto.ca/Degrees/PhD/PhDStudentBios/Stacey-Choy

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

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