Working Papers

Index investing and disclosure: Evidence from interactions between management and capital market participants

I examine whether index fund ownership is associated with fewer interactions between management and capital market participants at investor events such as earnings calls, conference presentations, analyst/investor days, and company visits. Investor events are distinct from other voluntary disclosures because they offer investors and analysts the opportunity to ask management questions. While prior research documents that index fund ownership is associated with more guidance and 8-Ks, I find a negative association with the number of investor events. This negative association is driven by reduced demand for firm-specific information, consistent with the prediction following from the seminal Grossman-Stiglitz model on efficient markets. The level of index fund ownership is also negatively associated with the information content of non-earnings investor calls and meetings, as well as conference presentations, but positively associated with the information content of earnings calls. Further, whether firms organize an earnings call is crucial in maintaining the informativeness of stock prices when index fund ownership increases. These findings show that index investing can have a detrimental effect on firms' information environments.

How executive turnover affects earnings announcement disclosure content and formatting choices 

with Jeremiah Bentley (University of Oklahoma) & Máté Széles (Tilburg University)

We examine how individual executives influence content and formatting in earnings announcements, a critical disclosure channel in capital markets. While prior research extensively focuses on the demand side of earnings announcements, the production process remains underexplored. Using a sample of 177,668 quarterly earnings announcements, including 4,835 firm-quarters with CEO appointments and 6,982 firm-quarters with CFO appointments, we find that both CEOs and CFOs significantly shape earnings announcement content and formatting, with CFOs playing a more dominant role. Both new CEOs and new CFOs initiate new disclosure and formatting practices; however, the decision to discontinue them rests primarily with the CFO. New CEOs are more likely to influence earnings announcements disclosure if they are hired after negative firm performance. In contrast, CFOs influence disclosure regardless of prior performance. Both CEOs and CFOs influence top-line and bottom-line metric disclosures, such as revenue and earnings, while CFOs appear to have the primary influence on the disclosure of other metrics, such as EBIT and operating cashflow. The impact of new executives is more pronounced if they are external hires, who partially transfer disclosure practices from their prior firms. These effects are immediate, suggesting that long tenure is not necessary for imprinting disclosure styles. These findings underscore the significant role individual executives play in shaping how their firms communicate financial performance to markets, as well as the differential disclosure responsibilities held by CEOs and CFOs.

Let's talk about ESG: The emergence of ESG-focused investor events 

with Philip Joos (Tilburg University) & Christoph Sextroh (Carl von Ossietzky University of Oldenburg & Tilburg University)

Firms regularly meet with investors to discuss corporate strategy and recent performance. More recently, firms began to host or participate in investor events that specifically focus on ESG. Using a comprehensive sample of ESG-focused investor events, we investigate the role of these meetings in capital markets. The number of ESG-focused investor events significantly increases after 2017. Firms participating in such events are likely to continue to participate in ESG-focused investor events, suggesting that these meetings are not just one-time events in response to, for example, specific economic shocks. We also document that firms participating in ESG-focused investor events show generally higher ESG metrics, but also originate from industries with higher ESG-related risks. In addition, the information environment of ESG-focused investor events is different from other events, and hosting or participating in ESG-focused investor events is associated with increases in ownership by ESG-focused funds. Overall, our results suggest that ESG-focused investor events are likely to constitute a new type of information channel in the corporate reporting ecosystem.

Curriculum Vitae