Meet Markets: Investor Meetings and Expected Returns

42 Pages Posted: 8 Jan 2021 Last revised: 12 Apr 2021

See all articles by Eric C. So

Eric C. So

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Rongfei Wang

China Investment Corporation (CIC)

Ran Zhang

Renmin University of China - School of Business

Date Written: December 18, 2020

Abstract

We show meetings of investors and firms convey information about expected returns. Investors frequently travel to meet in-person with firms before investing, and we show firms with abnormally frequent meetings predictably outperform firms with abnormally infrequent meetings by roughly 70-to-100 basis points per month. Abnormally frequent meetings also predict improvements in firms’ fundamental performance, suggesting our results stem from investors allocating time and attention to meetings with management from underpriced firms. Together, our findings highlight the usefulness of investors’ resource allocation decisions in expected return estimations, and provide insights into the multi-stage process investors undertake when forming portfolios.

Keywords: Investor meeting, Information arbitrage, Expected returns, Return predictability

JEL Classification: G10, G11, G12, G14, M40, M41

Suggested Citation

So, Eric C. and Wang, Rongfei and Zhang, Ran, Meet Markets: Investor Meetings and Expected Returns (December 18, 2020). Available at SSRN: https://ssrn.com/abstract=3751468 or http://dx.doi.org/10.2139/ssrn.3751468

Eric C. So (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Rongfei Wang

China Investment Corporation (CIC) ( email )

New Poly Plaza, No.1
Chaoyangmen Beidajie
Beijing, Dongcheng 100010
China

Ran Zhang

Renmin University of China - School of Business ( email )

Beijing
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
373
Abstract Views
1,340
rank
96,098
PlumX Metrics