Institutional Investors as Information Intermediaries: Evidence from Charity-Hosted Investment Conferences
Abstract
We examine institutional investors' presentations at charity-hosted investment conferences and show presenters act as information intermediaries at these events by contextually evaluating presented firms. Our study uses a unique setting where the information processing and analyses of sophisticated institutional investors are publicly disseminated, allowing us to examine how expert interpretation of public information aids the information processing of other market participants. Consistent with presentations improving other investors' information processing, prices reflect earnings news faster for presented firms in the quarters after presentations. The effect is stronger for presentations with in-depth analyses, multiple arguments, and longer presentation notes. Presenters are distinct information intermediaries as they use novel arguments compared to pre-conference analyst reports. After the conferences, the content of analysts' reports changes and they improve their earnings forecast accuracy. Our study sheds light on the previously unexplored role of institutional investors as information intermediaries and introduces a novel mechanism-termed the expertise effect-which complements the traditional awareness effect. Together, these effects underscore how institutional investors' presentations reduce information integration costs for other market participants.