Blockholder Mutual Fund Participation in Private In-House Meetings

Authors

Robert Bowen, Chapman UniversityFollow
Shantanu Dutta, University of Ottawa
Songlian Tang, Donghua University
Pengcheng Zhu, University of San Diego

Document Type

Article

Publication Date

4-10-2023

Abstract

The Shenzhen Stock Exchange (SZSE) in China is unique worldwide in requiring disclosure of the timing, participants, and selected content of private in-house meetings between firm managers and outsider investors. We investigate whether these private meetings benefit hosting firms and their major outside institutional investors—blockholder mutual funds (i.e., funds with ownership ≥5%). Using a large data set of SZSE firms, we find that blockholder mutual funds have more access to private in-house meetings, and top management is more likely to be present, especially when a meeting is associated with negative news. Furthermore, when blockholder mutual funds attend negative-news meetings with top management, they are less likely to sell shares, their investment relationship with the hosting firm lasts longer, and hosting firms experience lower postmeeting stock return volatility. These findings suggest that private in-house meetings are an informative disclosure channel that improves social bonding between top management and blockholder mutual funds in ways that benefit hosting firms.

Comments

This article was originally published in Journal of Financial Research in 2023. https://doi.org/10.1111/jfir.12327

Recommended Citation

Bowen, R.M., Dutta, S., Tang, S. and Zhu, P. (2023). Blockholder mutual fund participation in private in-house meetings. Journal of Financial Research. https://doi.org/10.1111/jfir.12327

Peer Reviewed

1

Copyright

The authors

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 License.