In the paper, Private Interaction between Firm Management and Sell-Side Analysts, which was recently made publicly available on SSRN, I investigate private interaction between sell-side analysts and senior management by examining a set of internal records compiled by a large-cap NYSE traded firm. Thousands of hours of senior management time are consumed speaking with sell-side analysts annually at publicly traded firms. Despite this significant use of time, there is little academic evidence that directly examines these interactions. The analysis in this paper seeks to begin a dialogue to fill this gap.
I find that analysts who privately meet with management cover fewer firms, have less experience, and cover the sample firm for a longer period of time. These individual analyst characteristics dominate attributes of the firms they work for in explaining which analysts privately interact with management.
Evidence indicates that analysts who interact privately are more likely to create reports. I do not find that private interaction significantly improves the accuracy of analysts’ earnings estimates. Evidence also suggests that private interaction with management largely complements, rather than substitutes for, other means of public interaction such as quarterly conference calls.read more