The Informational Role of Investor Relations: Evidence from the Debt Market

• 成果类型: Article
• 署名作者: Kim, Eunjee; Sethuraman, Mani; Steffen, Thomas D.
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School; Cornell University; Yale University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0711
• 发表日期: 2021
• 页码: 275-302
• 关键词: CREDIT DEFAULT SWAP; CONFERENCE CALLS; Price discovery; earnings; analysts; disclosure; management; IMPACT; RISK; spreads

摘要

We explore the role of investor relations (IR) in debt markets. Using earnings announcements as a laboratory, we examine whether, when, and to what extent IR departments help credit investors assimilate information. We find that the presence of IR decreases (increases) the negative (positive) impact on CDS spreads stemming from bad (good) earnings news, suggesting that IR efforts improve information precision and reduce transparency risk. Cross-sectional analyses suggest that IR matters more when uncertainty is high and creditors are concerned about the credit risk implications of firm performance. We also find that IR firms receive higher credit ratings and fewer covenants when issuing bonds, and CDS markets react less negatively when IR firms' bond ratings are downgraded below investment grade. Because firms choose their IR activities, we show that our inferences are robust to multiple methods of addressing endogeneity. Overall, we find that IR departments are influential in debt markets.