While the shareholder benefits of investor conferences are well-documented, evidence on whether these conferences facilitate managerial opportunism is scarce. In this paper, we examine whether managers opportunistically exploit heightened attention around the conference to “hype” the stock. We find that (1) managers increase the quantity of voluntary disclosure leading up to the conference; (2) these disclosures are more positive in tone and increase prices to a greater extent than post-conference disclosures; and (3) these disclosures are more pronounced when insiders sell their shares immediately prior to the conference. In circumstances where pre-conference disclosures coincide with pre-conference insider net selling, we find evidence of a significant return reversal––large positive returns before the conference and large negative returns after the conference––and that the firm is more likely to be named in a securities class action lawsuit. Collectively, our findings are consistent with some managers hyping the stock prior to the conference.
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Research Article|
October 06 2022
The Dark Side of Investor Conferences: Evidence of Managerial Opportunism
Daniel J. Taylor
;
Daniel J. Taylor
University of Pennsylvania
3620 Locust Walk
1312 Steinberg-Dietrich Hall
UNITED STATES
Philadelphia
PA
19104
(215) 898-6769
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Christina Zhu
Christina Zhu
UNITED STATES
The Wharton School
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Received:
September 29 2020
Revision Received:
November 30 2021
Revision Received:
July 01 2022
Revision Received:
September 21 2022
Accepted:
October 03 2022
Online Issn: 1558-7967
Print Issn: 0001-4826
2022
The Accounting Review (2022)
Citation
Brian Bushee, Daniel J. Taylor, Christina Zhu; The Dark Side of Investor Conferences: Evidence of Managerial Opportunism. The Accounting Review 2022; https://doi.org/10.2308/TAR-2020-0624
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