Come on Over: Analyst/Investor Days as a Disclosure Medium

Abstract

Our study introduces analyst/investor days, a new disclosure medium that allows for private interactions with influential market participants. We also highlight interdependencies in the choice and information content of analyst/investor days and conference presentations, a well-researched disclosure medium that similarly allows for private interactions. Analyst/investor days are less frequent, but with longer duration and greater price impact than conference presentations. They are mostly hosted by firms that already have opportunities to interact with investors at conferences, but whose complex and diverse activities make the short duration and rigid format of a conference presentation an imperfect solution to these firms' information problems. Analyst/investor days and conference presentations tend to occur in different quarters, consistent with their competing for the time and attention of senior management. When these two mediums are scheduled in close temporal proximity to each other, analyst/investor days diminish the information content of conference presentations, but not vice versa, consistent with managers' favoring analyst/investor days over conference presentations as a disclosure medium. JEL Classifications: D82; M41; G11; G12; G14. Data Availability: Data are publicly available from the sources identified in the paper.

How Do Investors Perceive Long-Term Growth Targets and Forecast Horizons in Strategic Plans? Evidence From Italian Firms

“…However, when¯rms underperform or even achieve negative performance, management may provide investors with expectations on performance recovery through the new targets. Following Hart (2018) and Kirk & Markov (2016), we included the dummy variable LOSS equal to one for negative actual earnings and zero otherwise. We believe that the likelihood of issuing long-term growth targets increases as actual performance deteriorates.…”

“…To examine this e®ect, we introduced the dummy variable D INSTINV, which is equal to one if institutional investors hold more than 5% of the¯rm's shares outstanding and zero otherwise (Bamber & Cheon 1998, Alexandridis et al 2019). Following Bamber & Cheon (1998), Kirk & Markov (2016), Baginski et al (2004Baginski et al ( , 2017, we also included¯rm size (natural log of market value 2 days before the release date of strategic plans À À À LOGSIZE) to capture the demand for information. Managers of big¯rms are likely to issue much more quantitative and qualitative information than managers of small¯rms.…”

“…Therefore, we expect a positive sign of the coe±cient. As Kirk & Markov (2016), we calculated LEV as total¯nancial debt divided by total assets at the end of the prior¯scal year. In order to test whether managers' decision of disclosing long-term targets is associated with the valuation uncertainty, we used earnings volatility (EARNVOL) as an uncertainty proxy (Bozanic et al 2018).…”

“…Chakrabarty et al (2018) argue that¯rms with multiple businesses or geographical segments are likely to require longer disclosure statements to adequately explain their operations. Lastly, we therefore believe that the SPLTG disclosure is positively associated with the number of operating segments (SEGMENTS), since the high number of segments implies a high degree of valuation uncertainty (Kirk & Markov 2016). After illustrating in the strategic plan the future evolution of each business segment, managers may sum up the many long-term growth targets into a single number or in a range at rm level.…”

“…where CAR calculated as the cumulative market adjusted returns over the 3-day trading window (days À1, 0, þ1) around the strategic plan release. f While some prior research uses the absolute value of CAR (Baginski et al 2017, Kirk & Markov 2016, Bushee et al 2011, Baginski et al 2004, following Gu & Li (2007), Hart (2018), Lobo et al 2017, we used the CAR instead of its absolute value to highlight the sign e®ect (positive or negative) of our tested variable (SPLTG). We are interested not only in the price change of the SPLTG, but also in understanding whether the longterm growth targets are assessed as credible and relevant by investors and whether they convey useful incremental information.…”