Investor Relations' Quality and Mispricing
Houdou Basse Mama and
No 2017-33, EconomiX Working Papers from University of Paris Nanterre, EconomiX
We investigate the role of corporate investor relations (IR) in the correction process of mispricing. We provide robust evidence of accruals' mispricing for the sub-sample of firms with lower-rated IR. However, mispricing is more pronounced among firms with higher valuation uncertainty. Further analyses show that firms with higher-rated IR on average earn higher returns, and this relation is resilient to known risk/mispricing factors. More important, IR likely has countervailing effects on mispricing. IR may widen the information asymmetry among investors and concomitantly reduce future analyst forecast errors. Overall, high-quality IR appears to facilitate the market's ability to establish efficient stock prices.
Keywords: Investor relations; Mispricing; Mishkin test; Information asymmetry; Information uncertainty. (search for similar items in EconPapers)
JEL-codes: G12 G14 D82 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2017-33
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