We investigate how market participants react when corporate executives strategically blame the economy or industries for poor firm performance. In the quarters subsequent to earnings conference calls, we find that the “blame sentences,” which capture executives’ blaming tactics, predict negative and non-reverting abnormal returns, negative earnings surprises, and analyst recommendation downgrades. These blaming tactics also reduce the sensitivity of executives’ turnover to their performance. Our findings imply that executives strategically inject the negative information about future cash flows into blame sentences. Market participants need to combine distinct categories of information (firm-specific vs. economy-wide) to understand the implications of blame sentences, which consumes more cognitive resources and delays their reactions to the blame sentences.

We find that firms experiencing improvements in crowdsourced employer ratings significantly outperform firms with declines. The return effect is concentrated among reviews from current employees, stronger among early firm reviews, and also stronger when the employee works in the headquarters state. Decomposing employer ratings, we find the return effect is related to changing employee assessments of Career Opportunities and views of senior management. It is unrelated to work-life balance. Employer rating changes are associated with growth in sales and profitability and help forecast one-quarter-ahead earnings announcement surprises. The evidence is consistent with employee reviews revealing fundamental information about the firm.

This study investigates the association between quantitative disclosure and information risk, hypothesizing that a greater proportion of numerical information in earnings conference calls decreases information risk and thus increases firm value. We find that, even after controlling for earnings information, more extensive numerical disclosure correlates positively with earnings announcement returns. This effect concentrates in firms with poorer information environments and during periods of heightened performance uncertainty. Finally, we show that a greater proportion of numerical disclosure reduces implied volatility, bid-ask spread, and implied cost of capital. Our findings highlight numerical disclosure's role in reducing information risk and emphasize its importance in financial disclosures.

We investigate the effect of pre-IPO investments by public market institutional investors (institutions) on the exit of venture capitalists (VCs). Results indicate that institutions’ pre-IPO investments reduce IPO underpricing by mitigating VCs’ reliance on all-star analysts to boost market liquidity. We conclude that institutions facilitate VC exits in the secondary market. Supporting this view, our analysis reveals that the presence of institutions allows VCs to exit with a reduced price impact in the secondary market. Consistent with the ease of exit, VCs offer fewer shares at the IPO and are more likely to invest in institutionally backed startups.

Both sell-side analysts and the media are information intermediaries in capital markets. This study investigates the association between sell-side analyst research and information in firm-specific news coverage. More frequent recent news coverage is associated with stronger market reactions to analysts' research revisions, and primarily explained by soft information in news coverage. The primary result is robust to using both an instrumental variable and a quasi-natural experimental setting to generate exogenous variation in media coverage, alleviating concerns about endogeneity. In addition, using textual analysis, we document that explicit media references in analyst research reports are significantly associated with more frequent analyst revisions and stronger market reactions to revisions. Our study provides empirical evidence of analysts' assimilation of information from the financial press and their role in the efficiency of capital markets.

We show that institutional investors are more likely to invest in firms from regions to which they have stronger social ties but find no evidence that these investments earn a differential return. Firms in regions with stronger social ties to locations with many institutional investors have higher valuations and liquidity. These effects are largest for small firms with little analyst coverage, suggesting that the investors’ behavior is explained by their increased awareness of firms in socially proximate locations. Our results highlight that the social structure of regions affects firms’ access to capital and contributes to geographic differences in economic outcomes.