Are Investors’ Corporate Site Visits Informative?

• In Event: "Non-Traditional" Effects on the Firms' Information Environment
  In Paper Session: Non-Traditional Effects on the Firms' Information Environment

Abstract

Corporate site visits are an important type of information acquisition activity for investors, but their usefulness is not well understood in the literature, partly due to the lack of data. Using a unique dataset of corporate site visits in China, we analyze the information content and the determinants of corporate site visits. Our main findings are as follows. First, we document a significant market reaction around corporate site visits and the reaction is stronger for group visits, visits conducted by mutual fund managers, visits covering firm-specific topics, and firms with poorer information environments. Second, we find that stock returns around site visits are positively associated with forthcoming earnings news, suggesting that corporate site visits enable investors to obtain information predictive of future earnings. Lastly, consistent with the costs and benefits of conducting site visits, investors are more likely to conduct site visits to firms that are more profitable, have more business segments, have a higher market share, and are located closer to economic centers. Additional tests indicate that site visits are selective access events, not selective disclosure events. Overall, our study contributes to the literature by presenting the first systematic evidence on the information role of corporate site visits.

Authors

• Qiang Cheng, Singapore Management University

• Fei Du, The University of Hong Kong

• Xin Wang, The University of Hong Kong

• Yutao Wang, Central University of Finance and Economics