Leveraging An Information Mosaic: The Interplay between Private Meetings with Investors and Subsequent Earnings Announcements

47 Pages Posted: 25 Jul 2022 Last revised: 12 Oct 2022

See all articles by Xinlei Li

Xinlei Li

Hong Kong University of Science and Technology

Jason D. Schloetzer

Georgetown University - McDonough School of Business; Georgetown University - Department of Accounting and Business Law; Georgetown University - Department of Accounting and Business Law

Ayung Tseng

Georgetown University - McDonough School of Business; Georgetown University - Department of Accounting and Business Law

Hui Wang

Renmin University of China - School of Business

Date Written: July 14, 2022

Abstract

We draw from the SEC's concept of investors leveraging an information mosaic to predict that investors use soft information collected during face-to-face investor meetings to understand better the information released at subsequent earnings announcements. Our analysis examines firms that issue stand-alone management guidance in conjunction with face-to-face meetings compared to an entropy-balanced matched sample of firms that also issue stand-alone guidance but do not have such meetings. Consistent with investors leveraging an information mosaic, we find an incremental 10 percent reduction in investor uncertainty around the subsequent earnings announcements of firms that have private meetings relative to firms that do not. The incremental reduction is larger for firms with more soft information, consistent with the theorized mechanism of an information mosaic comprised of the soft information from private meetings. The evidence reveals an interplay between disclosures occurring at different times and provides evidence of investors leveraging an information mosaic.

Keywords: Selective disclosure, Investor meetings, Disclosure complementarity, Regulation

JEL Classification: G14, K22, M41, M48

Suggested Citation

Li, Xinlei and Schloetzer, Jason D. and Tseng, Ayung and Wang, Hui, Leveraging An Information Mosaic: The Interplay between Private Meetings with Investors and Subsequent Earnings Announcements (July 14, 2022). HKUST Business School Research Paper No. 2022-071, Georgetown McDonough School of Business Research Paper No. 4163114, Available at SSRN: https://ssrn.com/abstract=4163114 or http://dx.doi.org/10.2139/ssrn.4163114

Xinlei Li

Hong Kong University of Science and Technology ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Jason D. Schloetzer

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States
202-687-2672 (Phone)

HOME PAGE: http://explore.georgetown.edu/people/jds99/?PageTemplateID=319

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Ayung Tseng (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Hui Wang

Renmin University of China - School of Business ( email )

Beijing
China

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