Investor Relations, Firm Visibility, and Investor Following

2012 ◽  
Vol 87 (3) ◽  
pp. 867-897 ◽  
Author(s):  
Brian J. Bushee ◽  
Gregory S. Miller
Keyword(s):  
Media Coverage ◽  
Market Value ◽  
Data Availability ◽  
Direct Access ◽  
Investor Relations ◽  
Price Ratio ◽  
Matched Sample ◽  
Common Goal ◽  
Analyst Following ◽  
Key Driver

ABSTRACT We examine the actions and outcomes of investor relations (IR) programs in smaller, less-visible firms. Through interviews with IR professionals, we learn that IR strategies have a common goal of attracting institutional investors and that direct access to management, rather than increased disclosure, is viewed as the key driver of the strategy's success. We test for the effects of IR programs by examining small-cap companies that hired IR firms in a differences-in-differences research design with controls for changes in disclosure and determinants of the decision to initiate IR. Relative to a matched sample of control firms, we find that companies initiating IR programs exhibit greater increases in institutional investor ownership and a shift toward investors that normally would not follow the companies. We also find greater improvements in analyst following, media coverage, and the book-to-price ratio. Our results indicate that IR activities successfully improve visibility, investor following, and market value. Data Availability: All analyses are based on publicly available data.

Professional Investor Relations within the Firm

2014 ◽  
Vol 89 (4) ◽  
pp. 1421-1452 ◽  
Author(s):  
Marcus P. Kirk ◽  
James D. Vincent
Keyword(s):  
Control Sample ◽  
Data Availability ◽  
Regulatory Environment ◽  
Investor Relations ◽  
Regulation Fair Disclosure ◽  
Differential Impact ◽  
Analyst Following ◽  
Exogenous Shock ◽  
Fair Disclosure ◽  
Reg Fd

ABSTRACT: This paper investigates the effect of investments in internal investor relations (IR) departments on firm outcomes. We find that companies initiating internal professional IR experience increases in disclosure, analyst following, institutional investor ownership, liquidity, and market valuation relative to a matched sample of control firms. We also examine the differential impact the exogenous shock of Regulation Fair Disclosure (Reg FD) had on firms with an established professional IR department. We find these IR firms more than doubled their level of public disclosure post-Reg FD. Despite IR firms losing a potential communications channel following Reg FD adoption, we find they did not suffer adversely and instead show a post-Reg FD increase in analyst following, institutional investors, and liquidity relative to a control sample of similar non-IR firms. This implies that the effectiveness of professionalized internal IR increased post-Reg FD consistent with IR firms being relatively better positioned to navigate the more complicated regulatory environment. JEL Classifications: D82; M41; G11; G12; G14; G24 Data Availability: Data are publicly available from the sources identified in the paper with the exception of the membership data from the National Investor Relations Institute, which is a proprietary dataset.

The Impact of Effective Investor Relations on Market Value

2008 ◽  
Author(s):  
Vineet Agarwal ◽  
Angel Liao ◽  
Richard J. Taffler ◽  
Elly Nash
Keyword(s):  
Market Value ◽  
Investor Relations ◽  
The Impact

The Economic Consequences of Financial Restatements: Evidence from the Market for Corporate Control

2014 ◽  
Vol 90 (1) ◽  
pp. 1-29 ◽  
Author(s):  
Amir Amel-Zadeh ◽  
Yuan Zhang
Keyword(s):  
Corporate Control ◽  
Economic Consequences ◽  
Economic Resources ◽  
Data Availability ◽  
Matched Sample ◽  
Market For Corporate Control ◽  
Financial Restatements ◽  
Main Driver ◽  
Takeover Bids ◽  
Jel Classifications

ABSTRACT This paper investigates whether and how financial restatements affect the market for corporate control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for corporate control. JEL Classifications: D82; G14; G34; M41. Data Availability: Data are available from sources identified in the paper.

Social value analysis: the case of Pompeu Fabra University

2020 ◽  
Vol 11 (1) ◽  
pp. 233-252 ◽  
Author(s):  
Silvia Ayuso ◽  
Pablo Sánchez ◽  
José Luis Retolaza ◽  
Mònica Figueras-Maz
Keyword(s):  
Market Value ◽  
Research Process ◽  
Social Value ◽  
Data Availability ◽  
Value Analysis ◽  
Social Accounting ◽  
Content Type ◽  
The Social ◽  
Accounting Model ◽  
The University

Purpose This paper aims to explore how to quantify the social value generated by higher education from a social accounting perspective. The proposed approach is integrated social value (ISV) analysis, a social accounting model that considers both the economic value and the social value created by an organisation for its stakeholders. Design/methodology/approach The ISV analysis has been applied to Pompeu Fabra University, following a participatory action research process with representatives of the university and its stakeholders. Findings The final ISV includes not only the social value created through the university’s economic activity – captured by economic and financial accounting indicators – but also the specific social value created for the different stakeholders by means of non-market relationships, which were monetised through the use of indicators and financial proxies. Research limitations/implications Like other social accounting methodologies, ISV analysis suffers from some limitations regarding data availability and economic pricing, that partly will be resolved with maturation of the methodology and increasing standardisation. Practical implications By using appropriate proxies, the non-market value of the university can be monetised and integrated with university’s market value. The social value results become a valuable tool for developing useful indicators for internal management and external communication. Social implications The process of measuring the social value created by universities provides a way to meet the rising demands for greater accountability and transparency and facilitates engagement with stakeholders on how these institutions are contributing to a sustainable society. Originality/value ISV is a recently proposed social accounting model that combines an organisation’s economic and social results into a single concept of value creation and thus contributes to advance the field of social accounting.

A Temporal Analysis of Quarterly Earnings Thresholds: Propensities and Valuation Consequences

2005 ◽  
Vol 80 (2) ◽  
pp. 423-440 ◽  
Author(s):  
Lawrence D. Brown ◽  
Marcus L. Caylor
Keyword(s):  
Media Coverage ◽  
Temporal Analysis ◽  
Analyst Forecasts ◽  
The Other ◽  
Analyst Following ◽  
Quarterly Earnings ◽  
Economic Rationale ◽  
Time Period ◽  
Accuracy And Precision ◽  
Earnings Surprises

Applying a Burgstahler and Dichev (1997)/Degeorge et al. (1999) type methodology to quarterly data for the 1985–2002 time period, we show that, since the mid-1990s, but not before then, managers seek to avoid negative quarterly earnings surprises more than to avoid either quarterly losses or quarterly earnings decreases. Our findings suggest that the quarterly earnings threshold hierarchy proposed by Degeorge et al. (1999) does not apply to recent years, and that managers' claim that avoiding quarterly earnings decreases is the threshold they most seek to achieve (Graham et al. 2004) is inconsistent with their actions. We provide an intuitively appealing economic rationale for why the shift in threshold hierarchy occurred; since the mid-1990s, but not before then, investors unambiguously rewarded (penalized) firms for reporting quarterly earnings meeting (missing) analysts' estimates more than they did for meeting (missing) the other two thresholds. We provide several explanations for why investors unambiguously reward firms for reporting quarterly earnings that meet or beat analysts' estimates more than for meeting the other two thresholds late (but not early) in our sample period: increased media coverage given to analyst forecasts, more analyst following, more firms covered by analysts, and temporal increases in both the accuracy and precision of analyst forecasts.

scholarly journals Market reactions to CSR news in different industries

2020 ◽  
Vol 25 (2) ◽  
pp. 243-261
Author(s):  
Andrea Pérez ◽  
María del Mar García de los Salmones ◽  
Carlos López-Gutiérrez
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Media Coverage ◽  
Market Value ◽  
Market Reactions ◽  
Content Type ◽  
Goods And Services ◽  
The Media ◽  
Stock Market Reactions ◽  
Corporate Social

PurposeBased on the premises of the institutional theory, in this paper, we explore the effects that the media coverage of positive and negative Corporate Social Responsibility (CSR) news have on the stock market value of companies in diverse industries.Design/methodology/approachUsing a sample of 195 online articles published in the most important Spanish business newspaper, we implement an event study and a regression analysis.FindingsThe findings show that positive and negative CSR news, usually, have significant impacts on the stock market value of companies. Specifically, the market reaction is stronger under the announcement of negative news in all industries (i.e. basic, energy, finance and goods and services), although positive news also cause significant positive stock market reactions in the finance and basic industries.Originality/valueAlthough the media plays an indispensable role in the dialogue around CSR, much of the research focused on the role of the media on the CSR-CFP link does not consider how the industry variable can affect the abnormal stock returns derived from CSR news. This research contributes to this gap in the literature by exploring the differences that exist in the stock market reactions to CSR news based on the industry in which the companies operate.

Comparability of Earnings in Scandinavian Countries: The Impact of Mandatory IFRS Adoption and Stock Exchange Consolidations

2012 ◽  
Vol 12 (1) ◽  
pp. 55-76 ◽  
Author(s):  
Maria T. Caban-Garcia ◽  
Haihong He
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Data Availability ◽  
Price Ratio ◽  
The European Union ◽  
Multivariate Tests ◽  
Financial Reporting Standards ◽  
Country Factors ◽  
The Mean ◽  
The Impact

ABSTRACT This study examines the impact on the comparability of earnings of two important events that occurred in 2005 in the Scandinavian region: the European Union-mandated adoption of International Financial Reporting Standards (IFRS) and the mergers between the three national exchanges of Denmark, Finland, and Sweden. Our tests follow two approaches. The first approach relies on mean-centered earnings/price multiples following Land and Lang (2002) to determine if the multiples converge in the 2005–2008 period. Our results show that all countries except Finland experienced a lower mean-centered earnings/price ratio in the 2005–2008 period. Additionally, in the 2005–2008 period, the mean-centered earnings/price ratio in Norway deviates from the region's mean more than it deviates from the mean in Finland, Denmark, and Sweden, even after controlling for other firm and country factors. Our second approach uses a firm-year comparability measure (De Franco et al. 2011) calculated during the 2001–2004 and 2005–2008 periods to assess whether comparability increases during the 2005–2008 period. Since the two events in our study are contemporaneous, we use Norway as a benchmark to separate the effect of IFRS from that of harmonized regulation after the merger. The results generally show that comparability is significantly higher during the 2005–2008 period in all countries. Our multivariate tests also confirm that comparability increases (although marginally) for all OMX Nordic Exchange countries, relative to Norway, from the 2001–2004 to the 2005–2008 period. Data Availability: Data are available from public sources indicated in the paper.

scholarly journals Do Analysts Follow Managers Who Switch Companies? An Analysis of Relationships in the Capital Markets

2013 ◽  
Vol 89 (2) ◽  
pp. 451-482 ◽  
Author(s):  
Francois Brochet ◽  
Gregory S. Miller ◽  
Suraj Srinivasan
Keyword(s):  
Capital Markets ◽  
Data Availability ◽  
Professional Relationships ◽  
Matched Sample ◽  
Regulation Fair Disclosure ◽  
Analyst Coverage ◽  
Listed Firms ◽  
Fair Disclosure ◽  
Carry Over ◽  
Selective Disclosure

ABSTRACT We examine the importance of professional relationships developed between analysts and managers by investigating analyst coverage decisions in the context of CEO and CFO moves between publicly listed firms. We find that top executive moves from an origin firm to a destination firm trigger analysts following the origin firm to initiate coverage of the destination firm in 10 percent of our sample, which is significantly higher than in a matched sample. Analyst-manager “co-migration” is significantly stronger when both firms are within the same industry. Analysts who move with managers to the destination firm exhibit more intense and accurate coverage of the origin firm than they do in other firms and compared to other analysts covering the origin firm. The advantage no longer holds after the executive's departure, and most of the analysts' advantage does not carry over to the destination firm. However, the analysts do increase the overall market capitalization of firms in their coverage portfolio. Our results hold after Regulation Fair Disclosure, suggesting that these relationships are not based on selective disclosure. Overall, the evidence shows both the importance and limitations of professional relationships in capital markets. Data Availability: Data are publicly available from sources identified in the article.

Cost of Capital Free-Riders

2016 ◽  
Vol 91 (5) ◽  
pp. 1291-1313 ◽  
Author(s):  
Stephen P. Baginski ◽  
Lisa A. Hinson
Keyword(s):  
Information Transfer ◽  
Cost Of Capital ◽  
Information Loss ◽  
Data Availability ◽  
Policy Decisions ◽  
Analyst Following ◽  
Disclosure Policy ◽  
Free Riders ◽  
Management Forecast ◽  
Jel Classifications

ABSTRACTWe document the interrelationship of disclosure policy decisions among firms by providing evidence that the cessation of quarterly management forecast guidance by 656 firms (“stoppers”) during 2004–2009 is associated with a pursuant increase in quarterly forecasts by previously non-forecasting firms in the same industries (“free-riders”). Increased forecasting by free-riders is positively associated with the information loss in the industry (proxied by the number of stoppers in the industry, the strength of previously existing information transfer relations between stoppers and free-riders, and whether stoppers and free-riders are peer firms) and the importance of the information loss to the free-riders (proxied by analyst following and the existence of new share issues). Following the cessation event, free-riders' cost of capital decreases as a function of the extent to which free-riders immediately initiate quarterly forecasting.JEL Classifications: M41.Data Availability: Data are available from the sources indicated in the text.

Earnings Management in Firms with Data Security Breaches

2019 ◽  
Vol 33 (3) ◽  
pp. 267-284 ◽  
Author(s):  
Howard Xu ◽  
Savannah (Yuanyaun) Guo ◽  
Jacob Z. Haislip ◽  
Robert E. Pinsker
Keyword(s):  
Earnings Management ◽  
Data Security ◽  
Data Availability ◽  
Real Earnings Management ◽  
Matched Sample ◽  
Analyst Coverage ◽  
Subsequent Performance ◽  
Security Breaches ◽  
External Monitoring ◽  
The Cost

ABSTRACT Anecdotal research suggests that management is concerned about how Data Security Breaches (DSBs) impact a firm's financial performance. We investigate: whether managers in DSB firms manipulate earnings through real earnings management (REM) and/or accrual-based earnings management (AEM); how breach type, disclosure delay, and external monitoring impact earnings management activities; and how earnings management activities influence a DSB firm's performance. Using a propensity score matched sample, results suggest that DSB firms are more likely to manipulate earnings via REM, but not AEM. Additionally, we find that DSB firms engage in REM through cutting discretionary expenses, decreasing discretionary cash spending, and reducing the cost of goods sold through overproduction. We find some evidence that firms are more likely to increase REM when DSBs involve financial information or when firms delay the DSB disclosure or have low analyst coverage. We provide evidence that REM activities lead to lower subsequent performance in DSB firms. Data Availability: The data used are publicly available from the sources cited in the text.

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