Shall we talk? The role of interactive investor platforms in corporate communication

Between 2010 and 2017, Chinese investors used an investor interactive platform (IIP) to ask public companies around 2.5 million questions, the vast majority of which received a reply within two weeks. We analyze these IIP dialogues using a BERT-based algorithm and provide preliminary evidence on the...

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Bibliographic Details
Published in:Journal of accounting & economics 2022-11, Vol.74 (2-3), p.101524, Article 101524
Main Authors: Lee, Charles M.C., Zhong, Qinlin
Format: Article
Language:English
Subjects:
Corporate disclosure
Information processing costs
Interactive communication
Investor relations
Market liquidity
Price informativeness
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Summary:Between 2010 and 2017, Chinese investors used an investor interactive platform (IIP) to ask public companies around 2.5 million questions, the vast majority of which received a reply within two weeks. We analyze these IIP dialogues using a BERT-based algorithm and provide preliminary evidence on their causes and consequences. Our analyses show most questions reflect investors’ difficulties in processing information already in the public domain. Controlling for other news, higher IIP activity is associated with increases in trading volume, return volatility, market liquidity, and price informativeness as well as decreases in bid-ask spread. Financial statement-related postings increase around the adoption of new accounting standards. Collectively, our results show that investors face significant information processing costs but that IIP activities help reduce these costs, leading to improvements in stock price formation.
ISSN:0165-4101
1879-1980
DOI:10.1016/j.jacceco.2022.101524