Investors and analysts regularly get price-sensitive information in one-on-one meetings with corporate executives, according to a study released May 4 by Rotterdam School of Management, Erasmus University (RSM). The survey of about 400 global analysts and investors, found 47 percent of the respondents say they intentionally or unintentionally receive “material” information in these talks.
“This leads to inequality between investors and may distort the market,” says research leader Dr. Erik Roelofsen, who is a researcher at RSM and also a director for PwC in the Netherlands. The survey, conducted in the period between March 28, 2011 and April 1, 2011, was initiated by Dr. Roelofsen and his colleague Professor Gerard Mertens of the Rotterdam School of Management.
In its analysis, the report explains that institutional investors regard these talks as highly useful, particularly because they can look management in the eye and pick up non-verbal signals. Roelofsen adds, “Company executives aren’t always aware of it, but their conduct in meetings of this type are closely scrutinized. Some investors and analysts even follow training to better catch and understand these signals: For example, is an executive lying or feeling uncertain?”
The more important findings of the research among about 400 investors and analysts worldwide:
Around 47 percent of investors and analysts say that they frequently receive material information in on-one-one meetings with companies
The percentage is lower in US/Canada than in Asia, South America and Europe. This can probably be at-tributed to stricter legislation in the US.
Approximately 48 percent of investors and analysts themselves believe that companies ought to be more open about one-on-one meetings.
The survey is a joint initiative of the Rotterdam School of Management, Erasmus University and PwC. For more details, read RSM Global Analyst and Investor Survey .
