Investor Relations and Regulation FD

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professional IR member. And second, the close relationship with analysts and institutional investors that is central to IR also is one of the intended targets of the regulation. We examine the changes in disclosure, analysts, institutional investors and information asymmetry pre- and post-Reg FD for IR firms relative to control non-IR firms matched on multiple characteristics. We find evidence consistent with Reg FD achieving its goal of reducing private disclosure to select security market professionals. IR firms show a dramatic increase in public earnings disclosures immediately in the quarter when Reg FD was implemented. This increase continues to grow in the following quarters before remaining in a steady channel through the end of our sample period. This increase in public disclosure is economically and significantly greater than the increase in the control sample. However, despite Reg FD leveling the playing field by eliminating an IR firm’s ability to privately communicate with analysts and institutional investors, we find that IR firms do not suffer adversely in terms of analyst, institutional investor and information asymmetry variables relative to a control group of similar non-IR firms. On the contrary, an unintended consequence of Reg FD may have been to confer an advantage on IR firms. The change in the regulatory environment created by the economic shock of Reg FD created a selection pressure that favored firms with an established IR program as they had an enhanced ability to manage relationships and navigate the new environment. 27
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Page 1 and 2: Investor Relations and Regulation F
Page 3 and 4: professionalized IR role within fir
Page 5 and 6: field, IR firms do not lose any adv
Page 7 and 8: most members believed Reg FD would
Page 9 and 10: Reg FD. However, Heflin et al. (200
Page 11 and 12: current practices, educational prog
Page 13 and 14: FD period and maintain this match f
Page 15 and 16: changes. These economy-wide changes
Page 17 and 18: fiscal quarter. We follow Barron et
Page 19 and 20: manage communications with investor
Page 21 and 22: firms may be privately disclosing m
Page 23 and 24: These are consistent with the objec
Page 25 and 26: y institutional investors. In the p
Page 27: equally sized groups (Low Change an
Page 31 and 32: Panel A: Number of MEF .2 .4 .6 .8
Page 33 and 34: TABLE 2 Descriptive Statistics and
Page 35 and 36: TABLE 4 Changes in Public Disclosur
Page 37 and 38: TABLE 5 (cont.) Changes in Analysts

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