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Where Does Investor Relations Matter the Most?

Author

Listed:
  • Brochet, Francois
  • Limbach, Peter
  • Bazhutov, Dmitry
  • Betzer, André
  • Doumet, Markus

Abstract

Using a panel of survey-based annual investor relations (IR) rankings of European companies, we provide evidence suggesting that the marginal benefit of IR is greater in countries with capital markets that are less outside-shareholder oriented. For firms located in these countries, we find that IR quality is associated with significantly greater firm visibility, information assimilation, and valuation. The results hold for both the public and private functions of IR, and in terms of market reactions around conference presentations and analyst/investor days. Furthermore, using MiFID II as a shock to firms' information environment, we find a significantly incremental association between IR and information assimilation as well as cost of capital in those countries post 2017. Overall, the evidence suggests that IR is associated with greater marginal benefits in markets where demand for this type of shareholder communication has been historically lower.

Suggested Citation

  • Brochet, Francois & Limbach, Peter & Bazhutov, Dmitry & Betzer, André & Doumet, Markus, 2020. "Where Does Investor Relations Matter the Most?," CFR Working Papers 18-05, University of Cologne, Centre for Financial Research (CFR), revised 2020.
    • Handle: RePEc:zbw:cfrwps:1805
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    File URL: https://www.econstor.eu/bitstream/10419/213072/1/cfr-18-05-rev.pdf
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    1. Hope, Ole-Kristian & Huang, Zhongwei & Moldovan, Rucsandra, 2021. "Wall Street analysts as investor relations officers," Journal of Corporate Finance, Elsevier, vol. 67(C).

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    More about this item

    Keywords

    Investor Relations; Transparency; Ownership Concentration; Firm Visibility; Information Asymmetry; Cost of Capital;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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