This paper provides new evidence that investor attention explains positive returns around earnings announcements and reconciles the attention explanation with information-based explanations in the literature. I use earnings notifications, which are attention-grabbing announcements of the upcoming earnings date but otherwise provide little new information. I find positive returns, more EDGAR searches, and higher trading volumes on notification days. I also find that attention and returns around the earnings announcement are lower in the presence of notifications, consistent with notifications attenuating investor attention. I show that attention has its strongest effect on returns in the days immediately following the earnings announcement.

Pre-IPO firms may “test the waters” by meeting privately with investors in order to allow access to management and more time to make an investment decision. However, these meetings have the potential to undermine the SEC’s objectives of protecting investors and supporting market efficiency by allowing institutional investors, but not retail investors, private access to management. We find lower retail trading after IPOs of firms that held testing-the-waters meetings, consistent with the meetings reducing retail investor participation. Moreover, retail investors that still participate in the market in the presence of testing-the-waters meetings have inferior investment outcomes. Nonetheless, we find no evidence of lower overall market liquidity or slower price discovery following testing-the-waters meetings. In fact, we observe a reduction in stock return volatility. Overall our evidence suggests that, while testing-the-waters meetings may harm retail investors, there does not appear to be a negative impact on overall market function.

This paper examines whether managers can reduce the detrimental effects of information overload by spreading out, or temporally smoothing, disclosures. We begin by attempting to identify managerial smoothing. We find that when there are multiple disclosures for the same event date, managers spread the disclosures out over several days. Managers are also more likely to delay a disclosure when there has been a disclosure made within the three days before the event date. Finally, managers are more likely to engage in disclosure smoothing when disclosures are longer, the information environment is more robust, firm information is complex, uncertainty is high, and disclosure news is more positive. Our second set of analyses examines whether there are market benefits to disclosure smoothing. Using two different measures of disclosure smoothing, we find that smoothing is associated with increased liquidity, reduced stock price volatility and increased analyst forecast accuracy.

A dedicated investor relations (IR) function facilitates direct and ongoing dialog between management and shareholders. This paper examines whether this form of engagement mitigates activism that relies upon support from other shareholders. We find that IR engagement is associated with increased investor confidence in management and the board, as well as a lower likelihood of activism, with this deterrent effect becoming stronger when there are fewer frictions surrounding the development of mutual understanding and trust with investors. We also find that when firms do experience an activist campaign, firms with IR engagement have less costly and contentious campaigns, including a lower likelihood of CEO turnover, than those without such a commitment. Taken together, our findings suggest that direct and ongoing IR engagement is an important factor in achieving mutual understanding and trust between the firm and its shareholders, which deters activist investors and mitigates the costly escalation of initiated campaigns.

We examine the role of investor relations (IR) in private debt markets. We find that firms with dedicated IR officers (IROs) receive significantly lower loan spreads, particularly when lenders require a better understanding of the borrower’s risk profile. Among firms with IROs, those with longer tenured officers experience lower spreads, especially when IROs also manage financial responsibilities. To address endogeneity concerns, we demonstrate that loan spreads decline when a firm establishes an IR program and rise when the program is discontinued. Furthermore, when a different individual assumes the IRO role, loan spreads increase, even though there are no reductions in firm disclosure. Loans issued to firms with IROs also have shorter syndication duration, attract more nonrelationship, foreign, and nonbank participant lenders, feature more customized covenants, and are less likely to undergo renegotiation. Overall, our study provides robust evidence of the relevance of IR in private debt markets.