Private Meetings with Management and Investor Uncertainty at Subsequent Earnings Announcements

At a Glance

• Private meetings with management do not merely inform investors in the moment — they help investors interpret public disclosures that come later. Firms that issue management guidance in conjunction with private investor meetings show a 10 percent greater reduction in investor uncertainty around their subsequent earnings announcements than comparable firms that issued similar guidance but held no such meetings.
• The timing of the effect points clearly to the mechanism. There is no measurable difference in investor uncertainty around the guidance event itself or during the interim period before the earnings announcement. The reduction materializes specifically at the earnings announcement, consistent with investors using soft information gathered earlier to better interpret what the firm reports publicly.
• Soft information — not just more information — is what matters. Firms with more soft information characteristics, such as longer-horizon guidance or higher R&D intensity, show even larger reductions in investor uncertainty among their meeting attendees, consistent with face-to-face meetings being especially valuable for conveying what cannot easily be written down.
• The effect is not an artifact of self-selection into meetings. Using the early conferences of individual brokers as a quasi-exogenous setting, the study finds that the incremental reduction in investor uncertainty is 5.2 percentage points — even larger than the main result — suggesting the baseline finding is conservative rather than inflated by selection bias.
• The results shed new light on how investors assemble an information mosaic. Rather than reacting to each disclosure in isolation, investors appear to carry forward soft information from private meetings, weaving it together with subsequent public disclosures in a way that meaningfully reduces uncertainty about firm fundamentals.

Read on for a full breakdown of the research findings and their implications for corporate disclosure policy, investor relations practitioners, and regulators navigating the boundaries of Regulation Fair Disclosure.

Every quarter, thousands of company executives meet privately with institutional investors at broker-sponsored conferences, roadshows, and investor days. The conventional question about these meetings is whether they convey material information that generates immediate trading activity. A newer and more interesting question is whether they shape how investors subsequently react to public disclosures — and whether that shaping effect is legal under Regulation Fair Disclosure.

The SEC has long recognized the concept of an “information mosaic”: the idea that investors may legally accumulate non-material tidbits of information from private meetings and combine them with public disclosures in ways that produce material insights. Cheynel and Levine (2020) formalized this idea in a multi-period model where private information gathered before a public disclosure affects how investors process that disclosure. This study is the first to test the mosaic concept empirically, using a large sample of matched firms to isolate the relationship between private meetings and investor uncertainty at subsequent earnings announcements.

The empirical design is carefully constructed. The authors focus on 4,109 stand-alone management guidance events issued between 2001 and 2014 by 1,503 unique firms. Crucially, they restrict the sample to firms that issue guidance as a standalone disclosure — not bundled with an earnings announcement — and then compare firms that issued that guidance in conjunction with a private investor meeting to entropy-balanced matched firms that also issued standalone guidance but held no such meeting. This design holds the signal constant (guidance was issued either way) while isolating the incremental effect of the private meeting.

Investor uncertainty is measured using implied volatility from exchange-traded at-the-money options — a forward-looking measure of how uncertain investors are about a firm’s future cash flows. The authors examine changes in implied volatility across three windows: around the guidance event, during the interim period, and around the subsequent earnings announcement. The prediction is specific: if investors are assembling and leveraging an information mosaic, the effect of the private meeting should appear only at the earnings announcement.

That is precisely what the data show. Meeting firms and non-meeting firms display statistically indistinguishable changes in investor uncertainty both at the guidance event and during the interim period. But around the subsequent earnings announcement, meeting firms experience a 1.2 percentage-point incremental reduction in implied volatility relative to matched non-meeting firms. This may sound modest, but it represents a 10 percent greater reduction in investor uncertainty relative to the average earnings-announcement-period decline of 12.4 percentage points across the full sample — and it is about eight times larger than the typical daily change in implied volatility on non-disclosure days.

The mechanism is tested by interacting the private-meeting indicator with proxies for the richness of soft information. Firms with longer-horizon guidance — which conveys more forward-looking, unverifiable information — show even larger reductions in investor uncertainty at their earnings announcements. R&D-intensive firms, which by nature possess more non-codifiable, soft information, show incremental reductions roughly 63 to 75 percent larger than those of other meeting firms, based on 60-day option results. These patterns confirm that it is the soft-information content of private meetings, not merely the additional face time, that drives the effect.

To address endogeneity, the authors exploit the fact that 87 percent of private meetings in their sample occur at broker-sponsored investor conferences. Broker and investor characteristics — not firm characteristics — explain the vast majority of variation in which brokers host conferences and which firms receive invitations, meaning that early conference appearances are quasi-exogenous from the firm’s perspective. In this setting, restricting to the first 15 conferences hosted by each broker, the incremental reduction in investor uncertainty at subsequent earnings announcements ranges from 3.0 to 5.2 percentage points, substantially larger than the 1.2 percentage point baseline, suggesting that the main finding understates the true effect.

Two alternative explanations are considered and ruled out. First, private meetings could widen information asymmetry between investors who attend and those who do not — a Regulation Fair Disclosure concern. The authors find no evidence of differential changes in bid-ask spreads, price impact, or put-call parity across any of the three event windows, suggesting that meeting attendees do not gain information advantages that disadvantage other investors. Second, the effect could reflect different mean market reactions to the earnings news itself. Abnormal return volatility and abnormal trading volume show no significant differences between meeting and non-meeting firms across all three windows, ruling out this explanation as well.

For practitioners and regulators, the findings point in a nuanced direction. Private meetings do not appear to create the kind of selective advantage that Regulation Fair Disclosure was designed to prevent — they do not widen information asymmetry or produce differential market reactions. What they appear to do is help investors interpret public information more precisely. This distinction matters: it suggests that the value of private meetings lies not in what managers reveal but in how face-to-face interaction with soft information prepares investors to understand the subsequent public record — a function that is both economically valuable and, under current regulation, legally permitted.

Read the full paper: Private Meetings with Management and Investor Uncertainty at Subsequent Earnings Announcements