The Dark Side of Investor Conferences: Evidence of Managerial Opportunism
Revised: 14 February, 2023
Brian Bushee, Daniel Taylor, Christina Zhu, all hail from The Wharton School University of Pennsylvania
The authors examine whether managers opportunistically exploit heightened attention around investor conferences to “hype” the stock. The paper finds that managers increase the number of voluntary disclosures over the ten days prior to the conference, which results in a greater increase of prices than post-conference disclosures. In addition, the paper finds that the rise in pre-conference disclosure is more pronounced when insiders sell their shares immediately prior to the event. Unlike earnings announcements and periodic SEC disclosures, investor conferences are not accompanied by trading blackout windows to prevent corporate insiders from selling their shares prior to the event. When both pre-conference disclosures and insider selling coincide, there is evidence of a significant return reversal: large positive returns before the conference, and large negative returns after the conference. Collectively, the findings are consistent with some managers hyping the stock prior to investor conferences and selling their shares at inflated prices.
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