Where Does Investor Relations Matter the Most?

Francois Brochet, Peter Limbach, Dmitry Bazhutov, André Betzer and Markus Doumet

No 18-05, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

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.

Keywords: Investor Relations; Transparency; Ownership Concentration; Firm Visibility; Information Asymmetry; Cost of Capital (search for similar items in EconPapers)
JEL-codes: G14 M41 (search for similar items in EconPapers)
Date: 2020, Revised 2020
New Economics Papers: this item is included in nep-bec and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:1805

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