Q&A Interactions: Giving Investors a Voice and Managers’ Withholding of Information

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2022
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Seto, Samantha
Grant, Stephanie
Croom, Joe
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In response to the rising influence of retail investors, firms are increasing their engagement with retail investors, for example, by giving them a voice in the Q&A process (i.e., allowing them to express an opinion about the content covered during a Q&A). While giving retail investors a voice could benefit the firm by increasing investor engagement and trust, it could also lead to negative consequences, such as receiving more severe backlash if the firm withholds information or fails to adequately answer questions. In this study, we use an experiment to examine whether giving investors a voice in a Q&A interacts with managers’ answer type to affect investor judgments. We find that investors are less willing to invest in the firm if managers withhold information during a Q&A compared to if managers provide the information, but this negative reaction is mitigated when managers give investors a voice in the Q&A process. However, we demonstrate that this mitigative effect of investor voice is contingent on whether managers withhold information that investors specifically requested or information someone else requested. Investors grow more frustrated and have a more negative reaction when managers give them a voice but withhold the information they specifically requested. Our results have important implications for managers considering whether and how to engage with retail investors in a Q&A setting.
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retail investors, benefit of the doubt, voice, investment judgment, conference calls, trust
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