IR Papers: World roundup

Nov 29, 2012
<p>A roundup of academic research from the world of IR studies</p>

1. CSR disclosure has no effect  on the value of Indonesian banks, say researchers at Pelita Harapan University of Surabay in Indonesia.

2. A study of Newsweek’s green companies’ rankings finds they significantly affect shareholder value. The top 100 firms in its 2009 ranking saw abnormal returns following the information release, 0.6 percent-1 percent higher than those in the bottom 400, as reported in the journal Business & Society. Newsweek grades global and US companies based on their actual environmental footprint, management of that footprint and sustainability communications. This year’s global ranking sees Bell Canada Enterprises, Bradesco, BT Group, IBM, Santander Brazil, Santander (Spain) and Wipro in the top 20.

3. Reading accounting information on a computer screen is not the same as reading paper-based information, according to US researchers. Experimental evidence indicates that the navigational flexibility of hyperlinks produces cognitive overload leading to faster (and less optimal) investment decisions.

4. Highlighting numerical information in a good news earnings release headline can help attract investors’ attention to temporary good performance, allowing managers to opportunistically profit on their own account. Researchers in California say firms with more headlined quantitative descriptors experience relatively more insider selling and short-selling following an announcement.

5. Analyst stock recommendations have a significantly larger price impact when the broker has a conference-hosting relationship with the firm. An Australian-US research team also finds those analysts’ post-conference earnings forecasts are more accurate than non-host analysts. The researchers wonder, therefore, whether Reg FD works.

6. Institutional ownership and analyst following surges after an analyst/investor day, say US researchers. Sampling 1,467 analyst/investor days hosted by 850 firms from 2004 to 2011, they document a 26 percent increase in abnormal market activity and a 279 percent increase in analyst revisions in the three-day window surrounding the event date. Given that these events involve face-to-face interactions between management and select market participants, these investigators also query the efficacy of Reg FD.

7. Is there life after a complete loss of analyst coverage? An Anglo-US research team finds companies that lose all analyst coverage suffer a significant deterioration in bid-ask spreads, trading volumes and institutional presence; they do not, however, show much difference in subsequent performance relative to covered peers. Companies that lose all analyst coverage for a year are significantly more likely to de-list than their covered peers, the team also finds.

8. Egyptian investors pay almost no attention to corporate governance. They feel it’s important, according to researchers, but base investment decisions on other factors.

9. An exploratory study of 132 major global financial institutions finds an overall lack of strategy when it comes to implementing an effective corporate dialogue via advanced internet and social media platforms. The study’s Spanish authors suggest banks, under special scrutiny due to the global financial crisis, ought to start getting on the social media bandwagon.

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