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Investor Relations and Firm Investment Efficiency

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Item Summary Mescall, Devan Jung, Boochun Godsell, David 2018-11-27T19:17:50Z 2018-11-27T19:17:50Z 2018-09-01
dc.description.abstract ABSTRACT: We examine how the collection and dissemination of market intelligence by investor relations personnel (IRP) affects investment efficiency. We provide evidence that an increased flow of communication from investors to the board of directors, through IRP, is associated with more efficient investment decisions. Proprietary IR survey data illustrate IRP activities. We show that efficient investment decisions are positively associated with (1) the fraction of IRP time spent with existing and new institutional investors, (2) the number of one-on-one meetings between investors and IRP, and (3) IRP-board communication. Predictable associations between the type of IRP-board communication and investment efficiency corroborate our main result. In supplemental tests, we also find that a positive association between efficient investment and (1) IRP compensation and (2) IRP resources. Collectively, our evidence suggests that IRP play an important role as a conduit of market intelligence between investors and directors.
dc.subject IR
dc.subject market intelligence
dc.subject investment efficiency
dc.subject board of directors
dc.title Investor Relations and Firm Investment Efficiency
Appears in Collections: 05 Corporate Governance

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