The corporate-fund manager interface: objectives, information and valuation

John Roberts, Paul Sanderson, John Hendry and Richard Barker

Working Papers from Centre for Business Research, University of Cambridge

Abstract: Fund managers are the primary investment decision-makers in the stock market, and corporate executives are their primary sources of information. Meetings between the two are therefore central to stock market investment decisions but are surprisingly under-researched. There is little in the academic literature concerning their aims, content and outcomes. We report findings from interview research conducted with chief financial officers (CFOs) and investor relations managers from FTSE 100 companies and with chief investment officers (CIOs) and fund managers (FMs) from large institutional investors. Of particular interest we note that FMs place great reliance on discounted cash flow valuation models (despite informational asymmetry in favour of CFOs). This leads the former to seek to control encounters with the latter and to place great store on the clarity and consistency of corporate messages, ultimately relying on them for purposes other than estimating fundamental value. We consider some of the consequences of this usage.

Keywords: valuation; institutional shareholders; investor relations (search for similar items in EconPapers)
JEL-codes: G30 G34 O16 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-acc, nep-bec and nep-fin
Note: PRO-2
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Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp293

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