Public Disclosure of Private Meetings: Does Observing Peers’ Information Acquisition Affect Analysts’ Attention Allocation?

Abstract

We investigate the impact of observing peers’ information acquisition on financial analysts’ attention allocation. Using the timely disclosure mandate by the Shenzhen Stock Exchange as a setting, we find that, when analysts can observe that a firm is visited by other analysts, they allocate less attention to it. This finding is consistent with the conjecture that the timely disclosure reveals the relative information advantage of visiting analysts, leading nonvisiting analysts to reallocate their attention. Further evidence suggests that the timely disclosure has positive externalities in the form of increased attention and improved informational efficiency for nonvisited peer firms, especially those with low analyst following.

Keywords: attention allocation, informational efficiency, corporate site visits, externalities

JEL Classification: G24, G14, M41