Investor-firm private interactions and informed trading: Evidence from New York City taxi patterns

Marcus Kirk () and Zhenhao Jeffery Piao ()
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Marcus Kirk: Fisher School of Accounting, Warrington College of Business, University of Florida
Zhenhao Jeffery Piao: School of Accountancy, Robert J. Trulaske, Sr. College of Business, University of Missouri

Review of Accounting Studies, 2025, vol. 30, issue 2, No 3, 1136-1174

Abstract: Abstract This study investigates when institutional investors seek on-site meetings with their portfolio firms and the subsequent informativeness of their trading decisions. We identify private interactions by creating and validating a novel measure based on the taxi traffic between an institutional investor’s business office and its investee’s headquarters. This measure allows a more granular unit of analysis and better control for investor-specific characteristics correlated with investors’ private access. We find institutional investors allocate efforts to meetings with portfolio firms to shape expectations and gain investment advantages through these private interactions. Investors’ trades are more informed when there are more private interactions with investee firms. Consistent with public information leveling the playing field, cross-sectional results suggest that institutional investors’ returns from private information acquisition mainly concentrate in firms with opaque information environments. Overall, this study suggests that private interactions with public firms reward institutional investors with information that improves their trading decisions.

Keywords: Institutional investors; Private informational advantage; Corporate disclosure; Informed trading (search for similar items in EconPapers)
JEL-codes: G11 G14 G23 K22 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-024-09845-5

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