Review of Accounting Studies

, Volume 23, Issue 2, pp 487–527 | Cite as

Inside the black box of private in-house meetings

  • Robert M. Bowen
  • Shantanu Dutta
  • Songlian Tang
  • Pengcheng Zhu
Article

Abstract

We examine information content and related insider trading around private in-house meetings between corporate insiders and investors and analysts. We use a hand-collected dataset of approximately 17,000 private meeting summary reports of Shenzhen Stock Exchange firms over 20122014. We find that these private meetings are informative and corporate insiders conducted over one-half of their stock sales (totaling $8.7 billion) around these meetings. Some insiders time their transactions and earn substantial gains by selling (purchasing) relatively more shares before bad (good) news disclosures while postponing selling (purchasing) when good (bad) news is to be disclosed in the meeting. Finally, we conduct a content analysis of published meeting summary reports and find that the tone in these reports is associated with stock market reactions around (1) private meetings themselves, (2) subsequent public release of private meeting details, (3) subsequent earnings announcements and (4) future stock performance.

Keywords

Disclosure Private meetings Private information Insider trading Content analysis 

JEL classifications

D82 G14 G15 M41 

Notes

Acknowledgements

The authors acknowledge the helpful comments of an anonymous referee, Barbara Bliss, Nicole Cade, Shanqing Dong, Jane (Kennedy) Jollineau, Michel Lebas, Shiguang Liao, Jinguo Liu, Dawn Matsumoto, Chris Parsons, Johan Perols, Scott Richardson, Terry Shevlin, Qian Sun, Ruixiang Wang, Mitch Warachka, Carsten Zimmerman, postdoctoral research fellows at the Shanghai Stock Exchange, and workshop participants at the University of San Diego. An earlier version of the paper won the Emerald Best Paper Award at the 2016 China Finance Review International Conference in Shanghai and won the CFA Institute Asia-Pacific Capital Markets Research Award at the 2016 Auckland Finance Meeting in New Zealand. The research is funded by the National Natural Science Foundation of China (NSFC research grant number: 71672059).

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2017

Authors and Affiliations

  • Robert M. Bowen
    • 1
    • 2
  • Shantanu Dutta
    • 3
  • Songlian Tang
    • 4
  • Pengcheng Zhu
    • 1
  1. 1.School of BusinessUniversity of San DiegoSan DiegoUSA
  2. 2.Foster School of BusinessUniversity of WashingtonSeattleUSA
  3. 3.Telfer School of ManagementUniversity of OttawaOttawaCanada
  4. 4.School of BusinessEast China University of Science and TechnologyShanghai CityPeople’s Republic of China

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