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Private Interaction Between Firm Management and Sell‐Side Analysts

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  • EUGENE SOLTES

Abstract

Although sell‐side analysts often privately interact with managers of publicly traded firms, the private nature of this contact has historically obscured direction examination. By examining a set of proprietary records compiled by a large‐cap NYSE‐traded firm, I offer insights into which analysts privately meet with management, when analysts privately interact with management, and why these interactions occur. I also compare private interaction to public interaction between analysts and managers on conference calls. The evidence suggests that private interaction with management is an important communication channel for analysts for reasons other than firm‐specific forecasting news.

Suggested Citation

  • Eugene Soltes, 2014. "Private Interaction Between Firm Management and Sell‐Side Analysts," Journal of Accounting Research, Wiley Blackwell, vol. 52(1), pages 245-272, March.
  • Handle: RePEc:bla:joares:v:52:y:2014:i:1:p:245-272
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    File URL: https://doi.org/10.1111/1475-679X.12037
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    References listed on IDEAS

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    1. Robert Libby & James E. Hunton & Hun‐Tong Tan & Nicholas Seybert, 2008. "Retracted: Relationship Incentives and the Optimistic/Pessimistic Pattern in Analysts' Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 46(1), pages 173-198, March.
    2. Jessen L. Hobson & William J. Mayew & Mohan Venkatachalam, 2012. "Analyzing Speech to Detect Financial Misreporting," Journal of Accounting Research, Wiley Blackwell, vol. 50(2), pages 349-392, May.
    3. Bin Ke & Yong Yu, 2006. "The Effect of Issuing Biased Earnings Forecasts on Analysts' Access to Management and Survival," Journal of Accounting Research, Wiley Blackwell, vol. 44(5), pages 965-999, December.
    4. repec:bla:joares:v:35:y:1997:i::p:131-157 is not listed on IDEAS
    5. Amy P. Hutton & Lian Fen Lee & Susan Z. Shu, 2012. "Do Managers Always Know Better? The Relative Accuracy of Management and Analyst Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 50(5), pages 1217-1244, December.
    6. Shuping Chen & Dawn A. Matsumoto, 2006. "Favorable versus Unfavorable Recommendations: The Impact on Analyst Access to Management‐Provided Information," Journal of Accounting Research, Wiley Blackwell, vol. 44(4), pages 657-689, September.
    7. Ray Ball & Lakshmanan Shivakumar, 2008. "How Much New Information Is There in Earnings?," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 975-1016, December.
    8. Paul M. Healy & Krishna G. Palepu, 2003. "The Fall of Enron," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 3-26, Spring.
    9. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
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    Citations

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    Cited by:

    1. Michał Dzieliński & Alexander F. Wagner & Richard J. Zeckhauser, 2017. "Straight Talkers and Vague Talkers: The Effects of Managerial Style in Earnings Conference Calls," NBER Working Papers 23425, National Bureau of Economic Research, Inc.
    2. Qiang Cheng & Fei Du & Xin Wang & Yutao Wang, 2016. "Seeing is believing: analysts’ corporate site visits," Review of Accounting Studies, Springer, vol. 21(4), pages 1245-1286, December.
    3. repec:eee:jaecon:v:65:y:2018:i:2:p:302-330 is not listed on IDEAS
    4. Green, T. Clifton & Jame, Russell & Markov, Stanimir & Subasi, Musa, 2014. "Access to management and the informativeness of analyst research," Journal of Financial Economics, Elsevier, vol. 114(2), pages 239-255.
    5. Christof Beuselinck & Philip Joos & Inder Khurana & Sofie Van Der Meulen, 2017. "Which Analysts Benefited Most from Mandatory IFRS Adoption in Europe?," Post-Print hal-01745251, HAL.
    6. repec:eee:finlet:v:25:y:2018:i:c:p:47-54 is not listed on IDEAS
    7. Houdou Basse Mama & Rachidi Kotchoni, 2017. "Investor Relations' Quality and Mispricing," EconomiX Working Papers 2017-33, University of Paris Nanterre, EconomiX.
    8. Yong Chen & Bryan Kelly & Wei Wu, 2018. "Sophisticated Investors and Market Efficiency: Evidence from a Natural Experiment," NBER Working Papers 24552, National Bureau of Economic Research, Inc.
    9. repec:eee:jaecon:v:65:y:2018:i:2:p:358-379 is not listed on IDEAS
    10. Sanjay W. Bissessur & David Veenman, 2016. "Analyst information precision and small earnings surprises," Review of Accounting Studies, Springer, vol. 21(4), pages 1327-1360, December.
    11. repec:eee:aosoci:v:72:y:2019:i:c:p:61-73 is not listed on IDEAS
    12. Green, T. Clifton & Jame, Russell & Markov, Stanimir & Subasi, Musa, 2014. "Broker-hosted investor conferences," Journal of Accounting and Economics, Elsevier, vol. 58(1), pages 142-166.
    13. Lawrence D. Brown & Andrew C. Call & Michael B. Clement & Nathan Y. Sharp, 2015. "Inside the “Black Box” of Sell‐Side Financial Analysts," Journal of Accounting Research, Wiley Blackwell, vol. 53(1), pages 1-47, March.
    14. repec:spr:reaccs:v:23:y:2018:i:2:d:10.1007_s11142-017-9433-z is not listed on IDEAS
    15. repec:spr:reaccs:v:23:y:2018:i:4:d:10.1007_s11142-018-9453-3 is not listed on IDEAS
    16. repec:eee:accfor:v:42:y:2018:i:3:p:261-276 is not listed on IDEAS
    17. repec:eee:corfin:v:48:y:2018:i:c:p:148-168 is not listed on IDEAS

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