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Investor-firm private interactions and informed trading: Evidence from New York City taxi patterns

Author

Listed:
  • Marcus Kirk

    (Fisher School of Accounting, Warrington College of Business, University of Florida)

  • Zhenhao Jeffery Piao

    (School of Accountancy, Robert J. Trulaske, Sr. College of Business, University of Missouri)

Abstract

This study investigates when institutional investors seek on-site meetings with their portfolio firms and the subsequent informativeness of their trading decisions. We identify private interactions by creating and validating a novel measure based on the taxi traffic between an institutional investor’s business office and its investee’s headquarters. This measure allows a more granular unit of analysis and better control for investor-specific characteristics correlated with investors’ private access. We find institutional investors allocate efforts to meetings with portfolio firms to shape expectations and gain investment advantages through these private interactions. Investors’ trades are more informed when there are more private interactions with investee firms. Consistent with public information leveling the playing field, cross-sectional results suggest that institutional investors’ returns from private information acquisition mainly concentrate in firms with opaque information environments. Overall, this study suggests that private interactions with public firms reward institutional investors with information that improves their trading decisions.

Suggested Citation

  • Marcus Kirk & Zhenhao Jeffery Piao, 2025. "Investor-firm private interactions and informed trading: Evidence from New York City taxi patterns," Review of Accounting Studies, Springer, vol. 30(2), pages 1136-1174, June.
    • Handle: RePEc:spr:reaccs:v:30:y:2025:i:2:d:10.1007_s11142-024-09845-5
    DOI: 10.1007/s11142-024-09845-5
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    More about this item

    Keywords

    Institutional investors; Private informational advantage; Corporate disclosure; Informed trading;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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