Shall We Talk? The Role of Interactive Platforms in Corporate Communication

Abstract

We examine the causes and consequences of a new form of interactive corporate communication. Between 2010 and 2017, Chinese investors used an online platform to ask corporate managers over 2.5 million questions, the vast majority of which received a reply within two weeks. Our analyses show that: (a) most investor questions reflect difficulties in integrating information that is already in the public domain; (b) the level of platform activity varies by market condition and company performance; and (c) higher activity levels are associated with decreases in cost-of-capital and increases in market liquidity. Collectively, our results suggest interactive platforms can reduce information processing costs and improve market price formation.