Journal of Accounting and Economics 67 (2019) 58–79

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Journal of Accounting and Economics

journal homepage: www.elsevier.com/locate/jae

Managing the narrative: Investor relations officers and corporate

T
disclosure✰
Lawrence D. Browna, Andrew C. Callb, Michael B. Clementc, , Nathan Y. Sharpd
⁎

a
Temple University, USA
b
Arizona State University, USA
c
University of Texas at Austin, USA
d
Texas A&M University, USA

ARTICLE INFO ABSTRACT

Keywords: Investor relations officers (IROs) play a central role in corporate communications with Wall
Investor relations Street. We survey 610 IROs at U.S. public companies and conduct 14 follow-up interviews to
Investor relations officers deepen our understanding of the role of IROs in corporate disclosure events. Three important
Sell-side analysts themes emerge from our results: (i) the value, nature, and timing of private communication be-
Institutional investors
tween IROs, analysts, and investors; (ii) the significant influence IROs have on corporate dis-
Disclosure
closures; and (iii) the degree of “theater” involved in public earnings conference calls, even the Q
&A portion. We provide insights into the investor relations, analyst, institutional investor, and
disclosure literatures.

1. Introduction

Investor relations officers (hereafter, IROs) play an essential role in managing corporate communications with important sta-
keholders and in helping their companies achieve an appropriate valuation (NIRI, 2003), yet the academic literature on investor
relations is relatively nascent. An IRO's most basic responsibility is to communicate with the investment community and shape the
company narrative. This important responsibility requires IROs to interact regularly with sell-side analysts and institutional investors,
helping them interpret corporate disclosures, advancing the company narrative, and sharing feedback with company management. As
a result, IROs are at the center of many disclosure-related activities, including quarterly earnings conference calls and press releases,
among others. Because they manage so many important corporate disclosure activities, IROs are frequently called “chief disclosure
officers” (NIRI, 2014).
IROs are also corporate gatekeepers, often controlling the access of outsiders to senior management. They are responsible for
keeping senior management updated on what analysts and institutional investors think about the company, particularly in

✰
We appreciate helpful comments from Joanna Wu (editor), an anonymous reviewer, Rob Bloomfield, Kimball Chapman, Rebecca Corbin, Joshua
Khavis, Eugene Soltes, Michael Tang (discussant), Gwen Yu, Huai Zhang, and workshop participants at the 2017 AAA Annual Meeting, the 2018
AAA FARS Midyear meeting, Florida International University, Harvard Business School, University of Maryland, University of Miami (Finance),
Nanyang Technological University, Temple University, Texas A&M (Finance), Virginia Tech, and Washington University in St. Louis. We received
excellent research assistance from Heather Berry, Brian Blair, Fred Charles, Lauren Clark, Bethany Hickner, Hunter Meis, Erin Nickell, Sarah Norris,
Jason Tomkivits, and Megan Utz.
⁎
Corresponding author.
E-mail addresses: [email protected] (L.D. Brown), [email protected] (A.C. Call), [email protected] (M.B. Clement),
[email protected] (N.Y. Sharp).

https://doi.org/10.1016/j.jacceco.2018.08.014
Received 17 March 2017; Received in revised form 4 August 2018; Accepted 22 August 2018
Available online 28 August 2018
0165-4101/ © 2018 Elsevier B.V. All rights reserved.
L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

preparation for face-to-face meetings and public earnings conference calls. An important aspect of investor relations is managing the
expectations of both the sell side and the buy side, while also defending the company and portraying it in a favorable light. Thus, IROs
must balance important communication responsibilities both inside and outside the company—often with dueling objectives.
We survey 610 IROs of publicly traded U.S. companies and interview 14 IROs to better understand their roles in managing
companies’ communications with sell-side analysts and institutional investors and in overseeing corporate disclosures.1 Our survey
explores numerous topics for which IROs are uniquely qualified to provide valuable insights, including: the reasons, settings, timing,
and value of IROs’ interactions with sell-side analysts and institutional investors2; how IROs control outsiders’ access to senior
management; how sell-side analysts help IROs convey their company's message to institutional investors; the value of various types of
disclosures for communicating the company narrative; the role of IROs (vis-à-vis the role of CFOs) in preparing various disclosures;
planning for and managing public earnings conference calls; the size and composition of the conference call queue; private “call-
backs” after public earnings calls; the determinants of IROs’ internal performance ratings; and IROs’ experiences with Regulation Fair
Disclosure (Reg FD).
Three important themes emerge from our results: (i) the value, nature, and timing of private communication between IROs,
analysts, and investors; (ii) the significant influence IROs have on corporate disclosures; and (iii) the degree of “theater” involved in
public earnings conference calls. Regarding the first theme, we find that IROs consider private phone calls to be more important than
sell-side analysts, 10-K/10-Q reports, management earnings forecasts, and on-site visits for conveying their company's message to
institutional investors. About 40% of IROs indicate that private phone calls with members of the investment community after the
earnings release but before the public earnings conference call starts are at least somewhat important, and some IROs we interviewed
suggested these private calls help management prepare for the public call. In addition, over 80% of companies routinely conduct
private “call-backs” with institutional investors and sell-side analysts after public earnings conference calls. We find that company
management is unlikely to allow institutional investors to ask questions during the public earnings conference call, but companies
give priority to investors—particularly those with a large holding in the company's stock—for private “call-backs” after the con-
clusion of the public call.
Our findings also shed light on the influence of IROs on corporate disclosures. We find that IROs have significant input on all
forms of company disclosures, with nearly 70% of IROs reporting they have considerable influence on the substance and form of press
releases and about 84% saying the same about the prepared remarks of public earnings conference calls. IROs also believe certain
forms of disclosure (e.g., public earnings conference calls, road shows, press releases) are more important than others (e.g., 8-K
reports, on-site visits), which suggests they are more likely to utilize these disclosure channels to communicate with analysts and
investors. As the primary gatekeepers who control access to senior management, IROs indicate that they are more likely to grant
requests for access to senior management—a private disclosure channel—to analysts with a long history of covering their company
and to investors who work for a large investment firm than to Institutional Investor All-Star analysts or investors who work for a hedge
fund. IROs significantly shape the preparation, execution, and post-call activities that surround companies’ public earnings con-
ference calls, and they prioritize institutional investors with a large stake in their company and experienced analysts for private “call-
backs” during the very important period of time immediately following public earnings conference calls.
Lastly, while prior research documents that investors react negatively to scripted answers during the Q&A portion of conference
calls (Lee, 2016), we find that public earnings conference calls—even the Q&A portion—often involve more “theater” than prior
research has documented. Specifically, most IROs indicate that giving them an idea ahead of time of what questions to expect on the
upcoming call is an important service sell-side analysts provide. Further, IROs say that important ways they prepare for conference
calls include developing a script, preparing a list of possible questions and answers, developing a strategy for handling unanticipated
questions, and rehearsing the call. Our interviews with IROs suggest that institutional investors who do not wish to speak publicly on
conference calls—and thereby “reveal their hand”—use text messages or instant messaging to send their questions to sell-side ana-
lysts, who then ask the questions as if they were their own. The IROs we surveyed indicate that public earnings conference calls are
the single most important tool for conveying the company message to institutional investors, which helps explain the desire of
company management to carefully manage every aspect of these calls.
Our study contains numerous other findings that make unique contributions to the literature. For example, we provide evidence
on the role of investors in “walking down” sell-side analysts’ earnings forecasts, and we shed light on the dual roles IROs play as both
messengers for senior management and recipients of feedback from the investment community. Our results also provide evidence of
managers’ reservations about interacting with hedge funds, and their ongoing caution about avoiding potential violations of Reg FD.
To illustrate, 27% of IROs believe the typical IRO has answered a question from a member of the investment community and
subsequently issued an 8-K report in an attempt to avoid a Reg FD violation.
Relative to the important influence IROs have in communicating with Wall Street, the academic literature on IROs is relatively
sparse. Our study makes several contributions to this literature. While the prior research on investor relations has made important
strides by focusing on the benefits and consequences of IR programs (Bushee and Miller, 2012; Chapman et al., 2017; Karolyi and
Liao, 2017; Kirk and Vincent, 2014), our survey results shed new light on the process of investor relations—how IROs perform their
jobs, both in general and specifically as it relates to their interactions with sell-side analysts and institutional investors. Thus, our

1
The primary focus of our study is the role of IROs in shaping a company narrative that ties disclosures together into a cohesive story, as opposed
to the role of IROs in shaping specific disclosures, per se.
2
We use the term “institutional investors” to refer to buy-side analysts, portfolio managers, and others employed by institutional investment
firms. The introduction to our survey made this clear to our survey participants.

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

study improves our understanding of how IROs communicate the company narrative to important stakeholders. The insights we
obtain about the process of investor relations would be difficult to obtain without conducting a survey.
We also provide new insights into IROs’ influence on corporate disclosures. While prior research has examined the role of CEOs
and CFOs on corporate disclosure decisions (e.g., Bamber et al., 2010), the role IROs play in shaping corporate disclosures has been
largely ignored. Our findings indicate that IROs have considerable influence over corporate disclosure, and that their performance is
evaluated in large part based on their ability to manage these disclosures. Further, our findings on the usefulness of public earnings
conference calls and private “call-backs” speak to the importance of supplementing written disclosures (e.g., 10-Ks, 8-Ks, manage-
ment guidance) with these other interactions that help the firm “manage the narrative.”
Finally, we provide insights from company management on public earnings conference calls, which have generally been studied
from the perspective of analysts or institutional investors. For example, by documenting the relative importance of activities before
(i.e., advance notice of questions that will be asked, preparing a list of possible questions and answers), during (i.e., managing the
queue), and after (i.e., private “call-backs”) earnings conference calls, we provide a rich understanding of the dynamics involved in
this important disclosure event as well as new details about the nature, timing, and frequency of management's private commu-
nication with members of the investment community after the conclusion of the public call. In addition, while prior research
documents the value of various services sell-side analysts provide to institutional investors (Brown et al., 2016), our study provides
new insights about the value of sell-side analysts to management of the firms they follow.

2. Prior literature

Prior academic research on investor relations is relatively limited and generally focuses on the benefits of investor relations
programs.3 Bushee and Miller (2012) focus on the ability of external investor relations firms to help small companies overcome their
lack of visibility. They interviewed 11 IR professionals at firms that specialize in providing investor relations services for small- and
mid-cap companies, each of whom completed a brief, web-based survey about developing an effective investor relations strategy. The
authors find that external IR professionals believe facilitating direct communication with buy-side investors, including face-to-face
meetings, is the most important aspect of investor relations, and that sell-side analysts play an important role in improving firm
visibility. Their tests reveal that small companies using external IR firms are more likely than matched firms to experience im-
provements in institutional ownership, analyst following, media coverage, and book-to-price ratio. They conclude that IR programs
improve company visibility, investor following, and market value.
Kirk and Vincent (2014), using National Investor Relations Institute (NIRI) membership to identify companies with in-house
investor relations programs, examine the determinants of having such programs and their impact on public disclosures, analyst
following, institutional ownership, liquidity, and market valuation. They find that companies with greater uncertainty about future
earnings and cash flows are more likely to initiate IR programs, and that firms initiating these programs experience capital market
benefits and are better able to adapt to the regulatory changes made effective by Reg FD. Relatedly, Hong and Huang (2005) model
firms’ incentives to invest in IR activities, and highlight increased liquidity as a likely benefit of IR.
Karolyi and Liao (2017) and Chapman et al. (2017) investigate the consequences of IR activity. Karolyi and Liao (2017) use
responses to 23 (out of 70) questions in the 2012 Bank of New York Mellon survey of global IR professionals to create an estimate of
each company's overall amount of IR activity. The authors find that firms with active investor relations programs have higher Tobin's
q, greater analyst following, improved analyst forecast accuracy, and a lower cost of capital. These findings complement those of
Brennan and Tamarowski (2000), who document that IR activities result in increased liquidity and a lower cost of equity capital. In
addition, Chapman et al. (2017) find that companies with in-house investor relations teams have lower stock price volatility, higher
analyst forecast accuracy, and faster price discovery.
These studies typically focus on the important capital market outcomes of investor relations. Their archival approach is well
suited to identifying the outcomes or benefits of having a robust IR program. Our study focuses on the practices of the IROs who are
responsible for these outcomes, such as their impact on various corporate disclosure events (e.g., earnings guidance, conference
calls). As such, our survey and interviews allow us to document the process of IR that goes on behind the scenes. As stated by
Chapman et al. (2017), “the behavior of IR officers is largely unobservable, and thus difficult to capture.” Our study and the existing
literature complement each other.

3. Research design

3.1. Identifying a subject pool

Because our survey includes several questions about IROs’ interactions with sell-side analysts, we used the I/B/E/S database to
identify 5,470 U.S. companies with a unique I/B/E/S ticker and at least one sell-side analyst providing earnings estimates or stock
recommendations between April 1, 2014 and March 31, 2016 (the most recent two-year period available at the time of our data
collection). From this sample, we used a two-step process to hand collect names and email addresses for each company's IRO. First,

3
The National Investor Relations Institute (NIRI) defines investor relations as “a strategic management responsibility that integrates finance,
communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial
community, and other constituencies, which ultimately contributes to a company's securities achieving fair valuation” (NIRI, 2003).

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

we searched each company's website for contact information for the lead investor relations professional at the firm. Second, if the
company's website did not provide the IRO's name and email address, we searched online for the company's most recent earnings
announcement to see if it included contact information for the IRO.4 Our data collection process yielded 4,213 email addresses from
3,985 unique U.S. public companies with sell-side analyst coverage in I/B/E/S.

3.2. Developing and delivering the survey instrument

Our survey instrument was informed by a review of the academic literature on investor relations described above, as well as by
our review of the extensive literatures on sell-side analysts, institutional investors, and corporate disclosure. In addition, a rich
practitioner literature on investor relations has primarily grown out of surveys of IROs conducted regularly by the National Investor
Relations Institute (NIRI) and Bank of New York Mellon. While these surveys are primarily designed to facilitate benchmarking
among IROs at different companies on topics like compensation, budgets, and various investor relations practices, some practitioner
surveys focus more narrowly and deeply on topics such as earnings conference call practices or how to introduce a new CEO or CFO to
the investment community. We focused on asking questions that were unanswered in the academic and professional literatures and
that would be difficult to address without a survey. Although some of the questions in our survey naturally overlap topically with
questions from the practitioner surveys, we designed our questions to go beyond what is asked in the practitioner surveys and to fill
numerous gaps in the academic literature. We received feedback on an early version of our survey from a former IRO, the managing
partner of an IR research and advisory firm, buy-side analysts, sell-side analysts, and academic colleagues.
We asked a total of 15 questions that we placed into four groups of related questions that address: (i) IROs’ role in managing the
company narrative; (ii) determinants of IRO job performance; (iii) IROs’ interactions with the investment community; and (iv) the
dynamics surrounding public earnings conference calls. To avoid inducing a bias, we presented the questions about conference calls
last, and otherwise randomized the order in which the other three groups of questions were presented.5 Within these three groups, we
randomized the order of each question. Further, we randomized the order of the items within each question, with only a few
exceptions noted below.6
We used Qualtrics to administer our survey, and on September 7, 2016, we emailed each IRO in our subject pool an invitation to
participate and a unique link to access the survey. To encourage participation, we explained that for every completed survey, we
would make a donation to one of four charities selected by the IRO. To further encourage participation, we sent a reminder email on
September 13 and a final reminder with notification of plans to close the survey on September 22. We closed the survey on September
25, 2016. In total, we received 610 complete responses to our survey for a response rate of 14.5%. Response rates to accounting and
finance surveys administered via email have ranged from a low of 5.4% (Dichev et al., 2013) to a high of 10.9% (Brown et al., 2015),
suggesting that our survey was of keen interest to IROs.
Most survey questions allow the responding IRO to answer using a 7-point Likert scale. To help IROs respond meaningfully to each
survey question, and to ease interpretation of their responses, we labeled the endpoints of the scale in each question, both nu-
merically (ranging from 0 to 6) and with text. For example, at the top end of the scale, we provided labels such as “very important” or
“very likely,” depending on the context of the question; at the bottom of the scale, we provided labels such as “not at all important” or
“not at all likely.” IROs had the option to skip any survey question (or even individual items within a survey question) for any reason.

3.3. Interviews

We invited IROs to volunteer for a follow-up phone interview. Of the 610 IROs who completed the survey, 188 volunteered to
participate in an interview, and we conducted phone interviews with 14 of them. The purpose of these interviews was to gain
additional insights on some of the topics addressed in the survey and to ask additional questions that did not lend themselves to a
survey question. We sought to interview a diverse set of IROs that reflected the demographic characteristics of our full sample,
without considering any specific IRO's responses to the survey questions.7

4
Some companies provide names and email addresses for more than one IR professional on the main IR webpage or in the most current earnings
announcement. For these companies, we collected contact information for all IR contacts references by the company. In addition, some companies
provide a relatively generic email address for investor relations (e.g., [email protected]), without specifying the name of the individual at the
company to whom analysts and investors should direct their inquiries. In such instances, we cannot always confirm the identity of the responding IR
professional; however, because a company publicizes a generic email address to sell-side analysts and investors, it is reasonable to assume that only
high-ranking IR professionals have access to this email account. Only 34 of the 610 survey responses (5.5%) are from an IRO whose company
provided only a generic email address (e.g., [email protected]) without providing the name of the specific IR representative (e.g., Jane Doe) for
analysts and investors to contact. All other responses are from IROs who received a personalized invitation to participate in the survey. We find no
correlation between the use of these “generic” email addresses and company size.
5
Some of the items in the first three groups of questions relate to various aspects of the conference call (e.g., the usefulness of conference calls or
“call-backs”). Answers to these questions might have been biased if the IRO had already been presented with a series of questions focused ex-
clusively on conference calls, so we presented this group of questions last in order to avoid inducing a bias.
6
For parsimony, we present the results to some survey questions in an online appendix.
7
The interviewed IROs represent eight of the “primary industries” reported in Table 1, and five of the IROs we interviewed (36%) were female.
Nine of the IROs we interviewed (64%) have 10 years or more of experience as an IR professional, and the same percentage have annual com-
pensation above $300,000. These IROs work for companies with market capitalization as small as $250 million - $449 million and as large as $10

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

Before conducting the interviews, we made a list of questions to ask the IROs. Due to time constraints, we did not ask every
question to every IRO; however, multiple IROs answered each question. We used a semi-structured interview protocol, asking open-
ended questions and allowing the IROs to elaborate as they saw fit. Consistent with the recommendations of Malsch and
Salterio (2016), we continued interviewing IROs as long as we were still gaining new insights from each successive interview. With
permission from each IRO, we created an audio recording of each interview so we could focus on keeping the conversation flowing
and natural during the interview and to ensure that we accurately quoted the IROs in the paper. The interview insights we report in
the paper are specific quotes from individual IROs, but they reflect general insights expressed by multiple IROs.

3.4. Cross-sectional analyses

We conduct cross-sectional tests to explore variation in survey responses based on demographic characteristics of the responding
IROs. We estimate the following model:

Survey Response = 0 + 1 HF + 2 More + 3 Gender + 4 IR _Exp + 5 MBA + 6 CFA + 7 Size + 8 SS _Exp

+ 9 BS _Exp + 10 Guide + 11 EquityComp + 12 TotalComp + Industry + , (1)

where the dependent variable, Survey Response, is the IRO's response to the survey question being examined. The independent
variables are derived from the demographic information.
We include several variables to capture attributes of the IRO's employer. Because hedge funds have the ability to short the
company's stock, we include an indicator variable equal to 1 if the IRO indicates that hedge funds represent at least a 5% ownership
stake in the company, and 0 otherwise. We include an indicator variable for firms with a market capitalization of at least $1 billion
(Size) and identifying firms that issue earnings-related guidance (Guide). We also include industry fixed effects based on the primary
industry of the IRO's company.
We include several IRO-specific variables that might impact their approach to investor relations. For example, Kumar (2010) finds
that female analysts exhibit different forecasting behavior (bolder and more accurate) than male analysts, and Atkinson et al. (2003)
and Huang and Kisgen (2013) examine gender differences in studies of other corporate settings. Thus, we include an indicator
variable equal to 1 if the IRO is male, and equal to 0 if the IRO is female. We use indicator variables to identify IROs with at least
seven years of investor relations experience (IR_Exp), an MBA (MBA), and CFA certification (CFA). Further, because we ask several
survey questions about IROs’ interactions with sell-side analysts and buy-side investors, we include indicator variables identifying
IROs with prior experience in those fields (SS_Exp and BS_Exp, respectively).
Finally, we include variables that may affect IROs’ views on some of the questions in our survey. To address the possibility that
IROs interact differently with analysts depending on whether they want more or less analyst coverage, we include a categorical
variable (More) equal to 1 if the IRO indicates a preference for more analysts covering the company, 0 if the IRO indicates the current
level of coverage is about right, and −1 if the IRO indicates a preference for fewer analysts covering the company. We also include
two variables related to the IROs’ compensation. EquityComp is an indicator variable equal to 1 if the IRO indicates that at least 20%
of his/her total compensation is equity based, and 0 otherwise, and TotalComp is an indicator variable equal to 1 if the IRO indicates
that his/her total annual compensation is at least $300,000, and 0 otherwise. We add two additional variables when evaluating cross-
sectional variation in responses to questions specific to public earnings conference calls (discussed below in Tables 11–14). Speci-
fically, we include a variable to capture the number of individuals who typically enter the company's conference call queue (Queue)
and an indicator variable identifying IROs whose company typically conducts private “call-backs” with the investment community
after the conclusion of the public conference call (CallBack). We discuss some cross-sectional results below, and provide the full set of
cross-sectional results in an online appendix.

4. Empirical results, interview responses, and cross-sectional findings

After presenting demographic characteristics of the survey respondents, we provide survey results organized into four sections of
related questions that map into the groupings we used when administering the online survey. Most tables have four columns. Column
1 presents average ratings in descending order. Column 2 reports the results of significance tests comparing the average rating of each
item to the average rating of the other items in the question. We use Bonferroni-Holm-adjusted p-values to correct for multiple
comparisons (Nelson and Skinner, 2013). Columns 3 and 4 report the percentage of respondents who rate each item near the top (5 or
6) and bottom (0 or 1) of the 7-point scale, respectively. Consistent with recommendations from the Institutional Review Board, we
did not require survey respondents to answer a given question before proceeding to the next question, so the number of responses is
not identical across survey questions or items within a question. Each table reports the largest number of responses for any item in
that survey question.

(footnote continued)
billion or more, and their companies are followed by as few as 6 and as many as 27 sell-side analysts. Every IRO we interviewed reports directly to
the CEO or CFO of his or her company. The average interview lasted approximately 49 minutes.

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Table 1
Demographic characteristics of survey respondents.
Investors with 5% ownership % Years as IR Professional %
Hedge fund 61.54 < 1 year 5.08
Mutual fund 87.59 1–3 years 20.81
Defined-benefit pension fund 22.38 4–6 years 20.30
Insurance firm 9.62 7–9 years 11.68
Endowments or foundations 8.57 10 + years 42.13
High net-worth individuals 22.62
Retail brokerage clients 16.78 Years with current employer
< 1 year 8.89
Primary industry 1–3 years 26.34
Consumer discretionary 7.32 4–6 years 22.99
Consumer staples 3.99 7–9 years 13.26
Energy 10.82 10 + years 28.52
Financials 14.48
Health Care 13.64 Education
Industrials 8.99 Bachelor's degree in marketing 1.85
Information Technology 10.98 Bachelor's degree in communications 6.54
Materials 6.49 Bachelor's degree in accounting 17.79
Telecommunication Services 4.33 Bachelor's degree in business 11.91
Utilities 3.16 Bachelor's degree in economics 13.76
Other 15.81 Bachelor's degree in finance 17.28
Other bachelor's degree 20.64
Analyst following MBA 45.13
0–3 11.11 Other master's degree 19.30
4–6 21.03 Ph.D. 1.68
7–10 23.76
11–15 17.09 Certifications
16–20 11.62 Chartered Financial Analyst 11.15
21–25 7.18 Certified Public Accountant 16.56
26+ 8.12 Investor Relations Charter 4.92
Other 7.21
Preference for analyst following
Fewer than current number 14.91 Company market capitalization
Current level is about right 38.86 < $100 million 7.01
More than current number 46.23 $100 million–$249 million 6.51
$250 million–$499 million 8.68
Age $500 million–$999 million 12.52
< 30 4.52 $1 billion–$10 billion 50.08
30–39 25.29 > $10 billion 15.19
40–49 37.52
50–59 26.80 Prior experience
60+ 5.86 Corporate communications / PR 22.49
Corporate finance 49.40
Gender Corporate marketing / Sales 12.10
Male 66.10 Accounting 27.94
Female 33.90 Investment banking 13.97
Sell-side research 16.52
Institutional investing 10.05
Report directly to CEO/CFO? %
Yes 93.60
No 6.40
Issue earnings guidance?
Yes 56.47
No 43.53
Annual compensation
< $100,000 7.96
$100,000–$199,999 21.24
$200,000–$299,999 30.09
$300,000–$399,999 16.99
$400,000–$499,999 11.50
> $500,000 12.21
% Equity compensation
None 20.28
1%–9% 14.81
10%–19% 22.40
20%–29% 25.04
30% + 17.46

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4.1. Demographics

Table 1 presents demographic characteristics of our survey respondents. Mutual funds (88%) and hedge funds (62%) are the most
common investor types with at least 5% ownership in our sample firms; financials and healthcare (14% each) are the most common
industries; the median firm has 7–10 analysts following it; 65% of the firms have a market cap of at least $1 billion; 56% of firms issue
earnings guidance. While 46% of the IROs would prefer more analysts to follow their company, almost 15% would prefer fewer
analysts. The median age of IROs is 40–49; one-third are female; 42% have at least 10 years of experience in IR; 45% have an MBA.
Nearly half of the IROs have experience in corporate finance. Almost all IROs (93%) report directly to the CEO or CFO; about 40%
receive annual compensation of at least $300,000, and for 42% of the IROs, at least 20% of their total compensation is equity based.

4.2. Managing the narrative

4.2.1. How important are the following for conveying your company's message to institutional investors?
The purpose of this question is to assess the importance of various disclosures and disclosure channels at IROs’ disposal as they
seek to manage the company narrative.8 The importance of this question is underscored by the findings in prior research that the
investor relations function helps the firm gain visibility with institutional investors (Bushee and Miller, 2012), resulting in capital
market benefits including a lower cost of capital, less stock price volatility, and more rapid price discovery (Brennan and Tamarowski,
2000; Chapman et al., 2017; Karolyi and Liao, 2017). Importantly, we note that this question is not intended to identify the most
informative corporate disclosure channels, per se, but rather to identify the tools IROs find most important as they seek to convey the
company narrative to institutional investors.9
As reported in Table 2, IROs respond that public earnings conference calls are the most important tool for conveying their
company's message to institutional investors, with 88% saying public earnings conference calls are very important for this purpose.
This finding is consistent with the academic literature's focus on conference calls (Bowen et al., 2002; Brown et al., 2004; Bushee
et al., 2003, 2004; Call et al., 2017; Jung et al., 2018; Matsumoto et al., 2011; Mayew, 2008; Mayew et al., 2013). Over 65% of IROs
respond that private phone calls are very important for conveying their company's message to institutional investors, which is
consistent with findings in the prior literature that private meetings with investors are important information events (Bushee et al.,
2018). Indeed, IROs rate private phone calls as more important for conveying their company's message to institutional investors than
10-K or 10-Q reports, management forecasts of future earnings, and even sell-side analysts. Our cross-sectional tests reveal that both
earnings conference calls and private phone calls are particularly important to IROs of companies issuing earnings guidance.
In our interviews, we asked IROs about the importance of company messaging and the role of investor relations, and the im-
portance of establishing trust with the investment community was a common theme. One IRO told us candidly, “When something
goes wrong, basically what investors want you to do is acknowledge it, be forthright with what's occurred, and give them at least a
sense of a get-well plan.” Another IRO said, “Investors need to trust the person who is in investor relations. You're the front line of
defense…You have to be able to talk intelligently, talk rationally, without emotion, about what's happening, whether it's good or
bad.”
We also asked IROs about the value of public earnings conference calls. One IRO said the public calls present “a chance to spend
the time that is required to explain what you're doing—and you have the full attention of the market at that point because calls
typically aren't conflicting.” Regarding private phone calls, one IRO stated, “I'll initiate calls or calls will come into me, and that
happens on a daily basis. The calls can be on a range of topics.”
Less than 2% of IROs responded that social media is very important to conveying their company's message.10 In an interview, one
IRO said, “I don't find that my investor audience or analyst audience is looking for me to communicate with them through social
media.” Another IRO said, “It's not well suited [for investor relations because]…stories are often complicated.” Lastly, one IRO
commented on how he does use social media in his role: “We're active consumers…because Twitter…helps you identify things that
people care about.”

4.2.2. Please rate sell-side analysts with the following characteristics on their ability to help you convey your company's message to
institutional investors
Given that the IR function results in increased sell-side analyst following (Brennan and Tamarowski, 2000; Bushee and Miller,
2012; Karolyi and Liao, 2017), we asked about the characteristics of sell-side analysts who most effectively help IROs convey their
company's message to institutional investors. Table 3 reveals that the most highly rated analysts are those with considerable

8
Consistent with Healy and Palepu (2001), corporate disclosure includes both regulated financial reports (e.g., financial statements and 8-K
reports) and voluntary communication (e.g., management forecasts and public earnings conference calls).
9
We did not include “Press releases” and “Earnings releases” as separate items in this question because we felt having both options might confuse
IROs, given that earnings releases are often disseminated in a press release. Further, including two options about press releases in the same question
may have primed IROs to think that we believed press releases were particularly important, potentially biasing their responses.
10
This finding is not inconsistent with the results of Blankespoor et al. (2014). Our finding that IROs do not commonly use social media for the
specific purpose of conveying the company message to institutional investors does not preclude companies from relying on social media to dis-
seminate company news and disclosures (already in the public domain) to a broader audience, as Blankespoor et al. (2014) document. Further,
Blankespoor et al. (2014) find that the use of Twitter reduces information asymmetry among low-visibility firms, whereas the typical IRO in our
sample works for a large company that does not lack visibility.

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Table 2
Survey responses to the question: How important are the following for conveying your company's message to institutional investors?
% of respondents who answered

Responses Average rating Significantly greater than Very important (5 or 6) Not important (0 or 1)

(1) Public earnings conference calls 5.45 2–12 88.39 1.99

(2) Road shows 5.25 3–12 82.20 1.50
(3) Press releases 4.99 4–12 72.14 1.16
(4) Private phone calls 4.79 5–12 65.95 3.32
(5) Sell-side analysts 4.63 8–12 60.23 1.83
(6) 10-K or 10-Q reports 4.58 9–12 57.41 3.03
(7) Management forecasts of future earnings 4.52 9–12 64.23 10.48
(8) On-site visits 4.47 9–12 56.59 5.51
(9) 8-K reports 4.00 10–12 41.82 7.59
(10) The business press 2.64 12 12.77 26.37
(11) Informal settings (e.g., lunches, golf) 2.44 12 14.36 35.39
(12) Social media (e.g., Twitter, Facebook) 1.20 – 1.66 65.95
Total possible N = 603

Column 1 reports the average rating, where higher values correspond to greater importance. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating importance of 5 or 6 (0 or 1).

Table 3
Survey responses to the question: Please rate sell-side analysts with the following characteristics on their ability to help you convey your company's
message to institutional investors:.
% of respondents who answered

Responses Average rating Significantly greater than Very high ability (5 or 6) Very low ability (0
or 1)

(1) Analysts who have considerable experience covering your 5.10 2–6 78.83 1.00
company
(2) Analysts who possess considerable industry knowledge 5.01 3–6 75.75 1.17
(3) Analysts who work for a large brokerage 3.59 5–6 26.34 7.55
(4) Analysts who are Institutional Investor All-Stars 3.57 5–6 31.43 11.60
(5) Analysts who work for a brokerage that provides 3.08 – 15.68 16.69
underwriting services for your company
(6) Analysts who are frequently quoted in the business press 2.96 – 14.21 17.89
Total possible N = 600

Column 1 reports the average rating, where higher values correspond to greater ability. Column 2 reports the results of t-tests of the null hypothesis
that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating significantly exceeds
the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for multiple comparisons.
Column 3 (4) presents the percentage of respondents indicating ability of 5 or 6 (0 or 1).

experience covering the IRO's company, with 78% of IROs saying these analysts are very helpful in conveying their company's
message to institutional investors. About 75% say the same about analysts with industry knowledge, consistent with institutional
investors’ desire to communicate with sell-side analysts who possess industry knowledge (Brown et al., 2016). In contrast, fewer than
one-third of IROs say analysts who work for a large brokerage or who are II All-Stars are very helpful in conveying their company's
message to institutional investors. While the low rating for brokerage size and All-Star status may seem surprising given their
importance for analyst forecast accuracy (Clement, 1999; Mikhail et al., 1997; Stickel, 1992), this finding is consistent with evidence
that fewer than 3% of institutional investors say working for a large brokerage or being an II All-Star is a very important attribute in
their decision to use information analysts provide (Brown et al., 2016).
In our interviews, we asked IROs how they identify sell-side analysts with the ability to help with company messaging. One IRO
said, “I find industry experience to be more valuable in terms of the way an analyst is looked at and respected within the industry.”
Another IRO described why analysts with experience are so valuable to company messaging: “There's a lot of value to people who've
been covering you through different cycles…Someone who's a year into it is less likely to immediately recognize some of the little
changes in the market environment that can really turn the fortunes for a small sector or group of companies.” Lastly, many IROs
dismissed the II rankings. For example, one IRO said, “I think II is a bit of a popularity contest.”

4.2.3. For the purpose of managing your company's narrative, how important are the following services sell-side analysts provide?
Investor relations professionals also work closely with sell-side analysts and potentially have different perspectives on the value of
sell-side analysts than do buy-side investors (Brown et al., 2016). In Table 4, we ask IROs about the importance of various services

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Table 4
Survey responses to the question: For the purpose of managing your company's narrative, how important are the following services sell-side analysts
provide?
% of respondents who answered

Responses Average rating Significantly greater than Very important (5 Not important (0
or 6) or 1)

(1) Conveying your company's message to institutional 4.64 2–7 60.53 3.32
investors
(2) General feedback on how your company is perceived by 4.50 4–7 54.82 2.99
Wall Street
(3) Knowledge about industry trends and/or your company's 4.43 5–7 55.65 4.15
competitors
(4) Facilitating your company's communication and interaction 4.36 6–7 52.74 4.98
with institutional investors
(5) Published forecasts of your company's earnings 4.22 6–7 46.26 5.66
(6) Buy/sell/hold ratings for your company's stock 3.76 – 35.16 10.61
(7) Ideas regarding the types of questions to expect on your 3.67 – 34.05 11.63
company's upcoming public earnings conference call
Total possible N = 603

Column 1 reports the average rating, where higher values correspond to greater importance. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating importance of 5 or 6 (0 or 1).

sell-side analysts provide in order to inform the literature about the benefits sell-side analysts provide to the firms they follow.
IROs indicate that the most important service sell-side analysts provide is conveying their company's message to institutional
investors (60% say it is very important), followed by three other services most IROs deem important: knowledge about industry
trends and/or competitors (55%); general feedback on how their company is perceived by Wall Street (54%); and facilitating their
company's communication and interaction with institutional investors (52%). Given that the literature says little about what cor-
porate insiders believe are the most important services sell-side analysts provide, our findings point to potential avenues for future
research.
Importantly, although IROs indicate that sharing ideas about the types of questions their firm can expect on its upcoming public
earnings conference call is less important than most other services we asked about, 34% of IROs indicate that this is a very important
service sell-side analysts provide, and 88% of IROs indicate that this is at least somewhat important. This finding suggests that in
addition to actively participating on conference calls (Call et al., 2017; Jung et al., 2018), sell-side analysts also play an important
role in helping companies prepare for conference calls, and that the Q&A session is less spontaneous that it might appear to be.
In our interviews, IROs spoke about the value of the industry knowledge they obtain from sell-side analysts. One IRO said,
“Industry knowledge might be the most important aspect of doing investor relations well, because essentially the job is about
communicating in two directions about how a company is performing in relation to its peers.” Another IRO stated, “They gather so
much information from various IROs within the industry, and they do their channel checks; so collectively, they end up with a lot of
industry knowledge.”

4.2.4. How much influence do you believe the typical IRO and CFO have on the substance and form of the following disclosures?
A large body of research focuses on the nature and information content of both mandatory and voluntary firm disclosures. Recent
research has examined the impact of CEOs and CFOs on these disclosures (e.g., Bamber et al., 2010; Dyreng et al., 2010; Ge et al.,
2011). However, IROs also play an important role in determining their firm's disclosures, and IROs are sometimes referred to as “chief
disclosure officers” (NIRI, 2014). The question presented in Table 5 allows us to assess the extent to which IROs influence the
substance and form of various disclosures.11
IROs indicate that they have the least influence on management guidance of any disclosure in the question, and the most influence
on the prepared remarks of public earnings conference calls, with 84% saying IROs have considerable influence on these prepared
remarks. Our cross-sectional tests reveal that IROs employed by large companies are more likely to indicate that they have con-
siderable influence over this aspect of the conference call. Although IROs report that CFOs have greater relative influence on
company disclosures than IROs do (see the online appendix), an important contribution of our study is documenting that IROs have
considerable influence on each of these five disclosures.12

11
We present the results about CFOs’ influence over corporate disclosures in an online appendix.
12
The sample size in Table 5 is smaller than in any other table because for some survey participants we inadvertently included different wording
for some items in this question, and therefore exclude these responses from Table 5. Including all 600 responses for this question yields qualitatively
similar results, except there is no longer a significant difference between the influence of CFOs and IROs on the prepared remarks of public earnings
conference calls.

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

Table 5
Survey responses to the question: How much influence do you believe the typical CFO and IRO have on the substance and form of the following
disclosures?
Summary statistics for IROs

% of respondents who answered

Responses Average rating Significantly greater than Considerable influence (5 or 6) No influence (0 or 1)

(1) Prepared remarks of public earnings 5.37 2–5 84.01 2.38

conference calls
(2) Press releases 4.91 3–5 69.64 2.79
(3) MD&A section of 10-K reports 4.35 4–5 54.06 6.72
(4) 8-K reports 4.11 5 49.44 9.60
(5) Management forecasts of future earnings 3.82 – 40.90 13.17
Total possible N = 359

Column 1 reports the average rating, where higher values correspond to greater influence. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the other items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for multiple
comparisons. ***, **, and * (†††,††, and †) indicate the average rating for CFOs (IROs) is significantly larger at the 1%, 5%, and 10% level,
respectively. Column 4 (5) presents the percentage of respondents indicating influence of 5 or 6 (0 or 1).

During our interviews, we asked IROs to elaborate on their role in creating various disclosures. Concerning management forecasts
of future earnings, one IRO told us, “I don't generate the number. That's handled by the CFO and our FP&A (financial planning and
analysis) team…But I make my own forecasts as if I were an external person following our company. That's how I make sure that our
disclosure is helpful.” Reflecting on the significant influence of IROs in writing the prepared remarks for public earnings conference
calls, another IRO explained, “In terms of communication, part of my job is to write all the scripts for both the CEO and CFO.” Finally,
one IRO stated, “I work on the messaging and narrative long before the CFO and CEO ever see it. They don't get involved until the
very end. The week before the call, they look at a script and a press release and they say yay or nay.”

4.3. Determinants of IRO job performance

4.3.1. How important are your interactions with the following individuals for the purpose of doing your job effectively?
The central purpose of investor relations is to achieve a fair valuation of the company's securities (NIRI, 2014), and interacting
with institutional investors, sell-side analysts, and the business press helps IROs realize this goal. In order to communicate effectively
with external constituencies, IROs must also communicate regularly with company leadership. Further, IROs face the difficult task of
trying to maintain a reputation on Wall Street for being helpful and informed, while also pleasing their own CEO and CFO by
portraying the company in a favorable light. Table 6 reports the results of a question about the importance of IROs’ interactions with
various individuals inside and outside the company.
Nearly all IROs (97% for both CFOs and CEOs) say interactions with their company's CFO and CEO are very important for doing
their jobs effectively, which is consistent with our finding in the demographic questions that 93% of IROs we surveyed report directly
to the CEO/CFO. Collectively, our findings indicate that IROs are high in the corporate structure, underscoring the importance of
additional research on IROs (e.g., Chapman et al., 2017). About 90% of IROs say their interactions with institutional investors are

Table 6
Survey responses to the question: How important are your interactions with the following individuals for the purpose of doing your job effectively?
% of respondents who answered

Responses Average rating Significantly greater than Very important (5 or 6) Not important (0 or 1)

(1) Your company's CFO 5.83 3–6 97.00 0.50

(2) Your company's CEO 5.82 3–6 97.35 0.33
(3) Institutional investors 5.56 4–6 90.40 0.99
(4) Senior management of your company, other 5.35 6 85.93 0.33
than the CEO or CFO
(5) Sell-side analysts 5.28 6 82.59 1.16
(6) Members of the business press 2.19 – 10.12 39.80
Total possible N = 604

Column 1 reports the average rating, where higher values correspond to greater importance. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating importance of 5 or 6 (0 or 1).

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

Table 7
Survey responses to the question: How important are the following in determining your superior's assessment of your job performance?
% of respondents who answered

Responses Average rating Significantly greater than Very important (5 or 6) Not important (0 or 1)

(1) Preparing for and managing public earnings 5.43 2–9 87.89 1.49
conference calls
(2) Preparing company disclosures (e.g., press 4.97 3–9 73.59 2.82
releases, MD&A section of 10-K reports)
(3) Feedback from the investment community 4.78 4–9 65.17 2.82
(4) The number and quality of investor meetings 4.55 5–9 59.47 4.15
you secure for senior management
(5) Effectively utilizing sell-side analysts to 4.39 6–9 52.74 3.81
convey your company's message
(6) Your ability to screen outsiders’ access to 4.04 7–9 42.22 7.95
senior management
(7) Your ability to rein in outlier analysts 3.25 8–9 24.83 19.04
(8) Your company's stock performance 2.69 9 14.90 28.15
(9) Your company's ability to meet or beat the 2.43 – 16.97 36.44
consensus analyst earnings forecast
Total possible N = 604

Column 1 reports the average rating, where higher values correspond to greater importance. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating importance of 5 or 6 (0 or 1).

important for doing their job effectively, and 82% say this about sell-side analysts. In general, IROs indicate that their commu-
nications with each of the first five individuals in this list are very important to doing their job effectively and each received a
similarly high average rating. In contrast, only 10% of IROs deem interactions with members of the business press to be very
important.13
In our interviews, we asked IROs about their interactions with senior management of their companies. One IRO said, “You have to
work very closely with the CEO for corporate messaging and also involve the CFO, because part and parcel of any company strategy is
how they're going to finance their growth. This job would be impossible without working closely with the entire C-suite.” Two other
IROs spoke to the process of working with senior management to manage the company narrative. One said, “The CEO, CFO, COO, and
I all sit down and talk through and decide what we want the key messages to be, and then I take it from there.” Another related, “We'll
have meetings, maybe 10 days before a quarter end, and we'll just talk through the main issues…The most senior people in the
company: the CEO, COO, general counsel, CFO, and investor relations. We will have preliminary financial results, and we'll just
brainstorm together about what the messaging should be.”
Other IROs spoke to the potential conflict that arises when trying to please both external stakeholders (i.e., analysts, investors)
and internal company leadership. One IRO stated, “One of the first things I tell a management team when I start to work with them is,
‘I'm the messenger. You're not always going to like the message. But you need to hear it.’ …There's also going to be times when you
are telling the Street something they don't want to hear.” Another IRO said, “The primary conflict is the level of detail that analysts
and investors want about the company versus the level of detail that management wants to share…Management wants to limit the
amount of information that competitors can get and use against the company.” This insight is consistent with the idea that disclosing
proprietary information is one of the costs of voluntary disclosure (Verrecchia, 1983).

4.3.2. How important are the following in determining your superior's assessment of your job performance?
In order to gain insights about IROs’ incentives, we asked about the factors that determine their superiors’ assessment of their job
performance. The highest-rated item in Table 7 was preparing for and managing public earnings conference calls. Nearly 88% of IROs
say this is a very important determinant of their superior's assessment of their job performance. This result, combined with our
finding in Table 2 that public earnings conference calls are IROs’ most important mechanism for conveying their company's message
to institutional investors, underscores the importance of conference calls and the critical role of IROs in having a successful call. The
second-highest rated item is preparing company disclosures, consistent with IROs’ role as “chief disclosure officer.” Specifically, 73%
of IROs say preparing company disclosures is a very important determinant of their superior's assessment of their job performance.
This finding is consistent with our results in Table 5, which indicate that IROs have considerable influence over many company
disclosures.
Nearly two-thirds of IROs say feedback from the investment community is a very important determinant of their job performance,
which reflects the importance of IROs’ ability to answer questions from and consistently address the needs of analysts and investors.

13
Some companies delegate media-related responsibilities (e.g., monitoring the business press) to a separate public relations or media relations
officer who works closely with the IRO.

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

About 42% of IROs state that their ability to screen outsiders’ access to senior managers is important to their job performance,
consistent with IROs having a “gatekeeper” role with respect to filtering access to senior management.
Although meeting or beating earnings expectations is important to company management (Brown and Caylor, 2005; Graham
et al., 2005), more than twice as many IROs say their company's ability to avoid reporting negative earnings surprises is not a very
important determinant of their performance as say it is very important (36% versus 17%). In our interviews, the IROs clarified that
meeting or beating the consensus analyst forecast is very important to senior management, but that they are not personally held
accountable for a failure to do so because they have no influence on realized earnings and less influence on management earnings
guidance than the CFO. As one IRO said, “The investor relations group isn't responsible for creating the forecast…And if something
goes wrong and is likely to cause you to miss, it's happening on the operational side.”
About 80% of IROs indicated that reining in outlier analysts is at least somewhat important to their performance assessment, and
in our interviews, many IROs described a very active process of monitoring analysts’ forecasts. One IRO stated, “We look at analyst
models and look for inaccuracies and look for areas where we would feel comfortable giving them feedback…We reach out to those
analysts who are far off the mark.” Describing the process IROs use to review analysts’ models, one IRO told us, “We literally pour all
their models into a spreadsheet. So if you've got 10 analysts, you've got 10 columns…[If] I see that an analyst has a couple lines that
are just off, whether it's revenue or expense, and I know that there's something in the public that I can point to, I can help them rein in
that line.” Another IRO explained, “Typically a month out from earnings, we'll get everyone's latest models, and then we'll go through
them. If they modeled something incorrectly based on what we've said publicly, we'll highlight the discrepancy.”
While the literature has documented the incentives managers have to “walk down” analysts’ forecasts to create positive earnings
surprises (Richardson et al., 2004), several IROs shared with us an important insight that has not been discussed in the literature:
namely, that institutional investors (rather than the IRO) play an important role in the “walk down” process. One IRO said, “What isn't
visible to the public is that buy siders call up sell-side analysts all the time and chew them out. If there's an outlier to the upside or the
downside, they'll often hear from people who are stockholders saying, ‘Hey, what's with this number here?’ I'll tell you that goes on all
the time.” Similarly, another IRO talked about walking down analysts and said, “The reality is the investors actually do it themselves.
Folks who own the stock will call up the analysts and beat them up and totally leave the company out of it…If you own a stock, you're
aligned with the company. You want the results to be achievable.”

4.4. Communication with the investment community14

4.4.1. If the following individuals request private access to senior management, how likely would you be to grant the request?
IROs serve an important role as gatekeepers for senior management, controlling the access of outsiders such as sell-side analysts
and institutional investors. As reported above in Table 7, over 42% of IROs indicate that their ability to screen outsiders’ access to
senior management is a very important part of how they are evaluated by their superiors. The accounting literature examines
attributes of sell-side analysts who are likely to have superior access to information from management. However, because man-
agement access is difficult to observe empirically, researchers infer access to management based on coarse proxies such as the
favorableness of analysts’ stock recommendations (Chen and Matsumoto, 2006) or the pattern of their earnings forecasts (Ke and
Yu, 2006). We asked IROs about their role as gatekeepers in order to shed additional light on the factors IROs consider when granting
access to senior management, and we present the results in Table 8.
Specifically, we asked IROs how likely they would be to grant requests for private access to senior management by various
members of the investment community. Analysts with considerable experience covering the company are most likely to gain this
access to management, with 81% of IROs saying they are very likely to grant private access to these analysts. This finding is consistent
with prior research indicating that firm-specific experience helps analysts issue more accurate earnings forecasts (Clement, 1999),
and with our earlier finding that IROs believe experienced analysts more effectively convey their company's message to institutional
investors than any other type of analyst (see Table 3).
We also find that about 70% of IROs say they are very likely to grant private access to institutional investors who work for a large
investment firm or who work for a mutual fund, but only 39% say they are likely to do so for institutional investors who work for a
hedge fund, possibly because hedge funds can take a short position in the company's stock or often hold stock for a short time
(Griffin and Xu, 2009).15 We also find that 70% of IROs are very likely to grant access to sell-side analysts who possess considerable
industry knowledge, consistent with these analysts being in high demand among institutional investors (Brown et al., 2016).
In our cross-sectional tests, we find that female IROs are generally less likely to grant requests for private access to senior
management. Specifically, they are less likely than male IROs to grant access to (a) institutional investors who work for a large
investment firm, (b) institutional investors who work for a mutual fund, (c) institutional investors who work for a hedge fund, (d)

14
In an online appendix, we present the results to two additional survey questions related to IROs’ communication with the investment com-
munity. Specifically, we asked, “How likely would you be to contact sell-side analysts (or, alternatively, institutional investors) in the following
situations?” The majority of IROs indicate, for example, that they would be very likely to contact both sell-side analysts and institutional investors
after a major operational change at the company (e.g., M&A activity) or after a change in senior management.
15
Many institutional investors who work for a large investment firm also work for a mutual fund. However, we included separate options in
Table 8 for “institutional investors who work for a large investment firm” and “institutional investors who work for a mutual fund” because some
institutional investors at large firms work for a hedge fund or a large pension fund (or something else other than a mutual fund). We note that the
average rating for large investment firms (5.13) is significantly greater than the average rating for mutual funds (4.87), suggesting that institutional
investors who work for a large pension fund, for example, are also able to gain access to senior management.

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

Table 8
Survey responses to the question: If the following individuals request private access to senior management, how likely would you be to grant the
request?
% of respondents who answered

Responses Average rating Significantly greater than Very likely (5 or 6) Not likely (0 or
1)

(1) Analysts who have considerable experience covering your 5.21 2–10 81.40 1.99
company
(2) Institutional investors who work for a large investment firm 5.13 3–10 70.27 1.82
(3) Institutional investors who work for a mutual fund 4.87 5–10 70.88 2.83
(4) Analysts who possess considerable industry knowledge 4.84 5–10 70.27 2.99
(5) Analysts who work for a large brokerage 4.50 6–10 58.83 4.33
(6) Analysts who are Institutional Investor All-Stars 4.39 7–10 56.67 6.83
(7) Analysts who work for a brokerage that provides 4.27 8–10 54.27 8.88
underwriting services for your company
(8) Institutional investors who work for a hedge fund 3.94 9–10 39.27 7.49
(9) Analysts who are frequently quoted in the business press 3.77 10 37.56 10.85
(10) Members of the business press 2.73 – 16.61 27.68
Total possible N = 603

Column 1 reports the average rating, where higher values correspond to greater likelihood. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating likelihood of 5 or 6 (0 or 1).

analysts who are Institutional Investor All-Stars, and (e) analysts who are frequently quoted in the business press. In contrast, IROs who
would prefer to have greater sell-side analyst following are more likely to grant requests for private access to most analysts, including
those who (a) work for a large brokerage, (b) are Institutional Investor All-Stars, (c) work for a brokerage that provides underwriting
services for their company, and (d) are frequently quoted in the business press.
We asked IROs about the challenge of managing outsiders’ access to senior management. One IRO told us, “In terms of being a
gatekeeper, I want to treat all of my analysts equally; I don't like to play favorites…When I have limited time, I will put through the
ones with more experience and more knowledge of the industry. But I want them all to be happy. They are simply the megaphone that
I can use to reach more investors.” Another IRO stated, “I want all my analysts to think that they're my favorite. That is really key for
a successful program.” One IRO addressed the need to treat even negative analysts fairly: “At some point, if someone has a sell on
your stock and you get adversarial with them, if the macro factors start turning in your favor, they might be reluctant to upgrade you
as soon as they should.”
Shedding further light on the gatekeeper role, one IRO said, “I am the person answering questions directly on a day-to-day basis.
Well over 90% of the time, the communication with analysts is done by me.” Another IRO stated, “I can answer all their questions…
[but] sometimes I can tell that an analyst or investor just needs to hear my CEO say it.”

4.4.2. How likely would you be to have contact with the following individuals because a sell-side analyst revised his/her recommendation for
your company's stock?
Sell-side analysts’ stock recommendation revisions are important to the firm because they are often accompanied by changes in
the company's stock price (Elton et al., 1986; Womack, 1996), and revisions by one analyst can impact other analysts (Clement and
Tse, 2005; Cooper et al., 2001). We asked IROs with which individuals they are most likely to have contact after an analyst revises
his/her stock recommendation, and if this contact depends on whether the revision is an upgrade or a downgrade. We report the
results in Table 9.
Following a stock recommendation revision, IROs are most likely to have contact with the following (in decreasing order of
likelihood): (1) senior management; (2) the analyst who revised the recommendation; (3) an institutional investor; and (4) a different
sell-side analyst (other than the analyst who revised his/her stock recommendation). In all four cases, contact is more likely if the
revision is a downgrade. These findings highlight that sell-side analysts’ stock recommendation revisions—particularly down-
grades—are relevant to senior management, and that IROs play an important role in keeping senior management informed about
developments in the investment community.
One IRO we interviewed spoke about dealing with analysts who have a negative view of the company's stock, saying, “When an
analyst has a ‘sell’ on us, I view that as an opportunity to reeducate that person on us. Obviously that person doesn't understand our
story, and I consider it important to make sure we travel to meet with investors with that sell-side analyst, so that he/she has to spend
at least one day listening to our story during the course of eight meetings. I find that ‘sell’ ratings haven't lasted very long on my
company because of that outreach.”

4.4.3. With respect to regulation fair disclosure (Reg FD), how often do you believe the following situations arise for the typical IRO?
While many studies have examined the impact of Reg FD on companies’ information environments (Bailey et al., 2003; Lee et al.,
2014; Sidhu et al., 2008), IROs are in a unique position to provide insights on Reg FD because of their frequent interactions with sell-

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Table 9
Survey responses to the question: How likely would you be to have contact with the following individuals because a sell-side analyst revised his/her
recommendation for your company's stock?
% of respondents who answered

Responses Average rating Significantly greater than Very likely (5 or 6) Not likely (0 or
1)

(1) Senior management of your company—if the revision is a 5.05 2–8 73.46 4.34
downgrade
(2) Senior management of your company—if the revision is an 4.83 3–8 68.61 6.51
upgrade
(3) The analyst who revised the recommendation—if the 4.41 4–8 58.43 8.35
revision is a downgrade
(4) The analyst who revised the recommendation—if the 4.12 5–8 49.41 10.89
revision is an upgrade
(5) An institutional investor—if the revision is a downgrade 3.09 6–8 30.59 27.06
(6) An institutional investor—if the revision is an upgrade 2.72 7–8 19.57 30.10
(7) A different sell-side analyst—if the revision is a downgrade 2.26 8 16.92 43.72
(8) A different sell-side analyst—if the revision is an upgrade 2.09 – 13.21 45.99
Total possible N = 599

Column 1 reports the average rating, where higher values correspond to greater likelihood. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating likelihood of 5 or 6 (0 or 1).

side analysts and institutional investors. The private nature of these conversations makes it extremely difficult for archival research to
shed light on the frequency of potential Reg FD violations. Our question, reported in Table 10, assesses the frequency with which IROs
limit the information they share with sell-side analysts and institutional investors as a result of Reg FD.
Our findings reveal IROs are concerned about Reg FD and the possibility of violating it. Specifically, 37% of IROs say that a
member of the investment community asks a question several times a week that the IRO fully answers, but only after determining that
the answer does not violate Reg FD. Moreover, about 20% (53%) say that a member of the investment community asks a question at
least several times a week (several times a month, untabulated) that the IRO either does not answer or only partially answers, due to a
concern about a possible Reg FD violation. About 27% of IROs indicate that they believe the typical IRO has issued an 8-K in an
attempt to avoid a Reg FD violation after having answered a question from a member of the investment community, underscoring
their concern for avoiding selective disclosure.
In our interviews, IROs spoke about the significant impact of Reg FD on the practice of investor relations. One IRO told us, “Part of
the reason I'm always on the call with management is basically to be a referee…If someone does ask something that's too close to the
line, I will speak up and say, ‘That's a little too close to the line. We can't discuss that. Wait for the press release.” Another IRO
described how concerns about a possible Reg FD violation can come up after a meeting has ended: “I might be sitting there at the
airport and realize that something seemed uncomfortable. Maybe I was in a gray area. I might call the CFO and/or the general counsel
to decide how far in the gray area I was.”

4.5. Conference call dynamics

Healy and Palepu (2001) indicate that “corporate disclosure is critical for the functioning of an efficient capital market,” and
describe disclosure as communication through regulated financial reports (e.g., financial statements, footnotes) as well as voluntary
communication that includes management forecasts and conference calls. Public earnings conference calls are important disclosure
events because they allow senior management to discuss the company's recent earnings performance with the entire investment
community. Managers also typically discuss their forecasts of next-period results, and they give analysts and investors the opportunity
to ask questions and interact directly with company leadership. Although earnings conference calls have been the subject of much
academic research (Frankel et al., 1999; Jung et al., 2018; Mayew, 2008; Mayew et al., 2013), important questions remain that are
difficult to address with archival data. We asked several questions to deepen our understanding of conference call dynamics—from
the company's perspective—before, during, and after the call.

4.5.1. Filtering questions

Because all the questions in this section address issues related to public earnings conference calls, the first question we asked was
whether the IRO's company hosts public earnings conference calls, and we presented subsequent questions only to IROs who re-
sponded in the affirmative.16 As reported in Table 11 Panel A, the vast majority (95%) of IROs work for a company that hosts

16
IROs who indicated that their company does not host public earnings conference calls were not shown any additional questions in this section
and immediately were administered the demographic questions.

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Table 10
Survey responses to the question: With respect to Regulation Fair Disclosure (Reg FD), how often do you believe the following situations arise for the typical IRO?
% of respondents who answered

Responses Average rating Significantly greater than Several times a week / Never (0)
daily (5 or 6)

(1) A member of the investment community asks a question that 3.70 2–5 37.35 5.43
the IRO fully answers, but only after determining that the
answer would not violate Reg FD
(2) A member of the investment community asks a question that 3.38 3–5 21.32 3.55

72
the IRO does not answer because of concerns about a
possible Reg FD violation
(3) A member of the investment community asks a question that 3.28 4–5 22.24 6.96
the IRO only partially answers, due to a concern about a
possible Reg FD violation
(4) A member of the investment community asks a potentially 0.49 5 0.85 72.57
sensitive question that the IRO fully answers without
considering Reg FD
(5) A member of the investment community asks a question that 0.37 – 1.19 72.54
the IRO answers, but which results in a subsequent 8-K
report to avoid a possible Reg FD violation
Total possible N = 591

Column 1 reports the average rating, where higher values correspond to greater frequency, where 0 = never, 1 = about once a year, 2 = several times a year, 3 = about once a month, 4 = several times a
month, 5 = several times a week, and 6 = daily. Column 2 reports the results of t-tests of the null hypothesis that the average rating for a given item does not exceed that of any other item. We report the
rows for which the average rating significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for multiple comparisons.
Column 3 (4) presents the percentage of respondents indicating frequency of 5 or 6 (0 or 1).
Journal of Accounting and Economics 67 (2019) 58–79
L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

Table 11
Filtering questions.
Panel A

Survey responses to the question: does your company host public earnings conference calls?

Responses %

(1) Yes 95.55

(2) No 4.45
Total N = 606
Panel B

Survey responses to the question: are all individuals who enter the queue typically allowed to ask their question during the Q&A portion of your company's public
earnings conference calls?

Responses %
(1) Yes 57.79
(2) No 42.21
Total N = 578
Panel C
Survey responses to the question: Does your company select participants from the queue on your public earnings conference calls on a first-come, first-served basis?
Responses %
(1) Yes 41.42
(2) No 58.58
Total N = 577
Panel D
Survey responses to the question: Does your company typically conduct private “call-backs” with the investment community after your public earnings conference
calls?
Responses %
(1) Yes 81.91
(2) No 18.09
Total N = 575

This panel reports the percentage of IROs who indicate that their company hosts public earnings conference calls.
This panel reports the percentage of IROs who indicate that all individuals who enter the queue during the Q&A portion of public earnings
conference are able to ask their question.
This panel reports the percentage of IROs who indicate that their company selects participants form the queue on a first-come, first-served basis.
This panel reports the percentage of IROs who indicate that their company conducts private “call-backs” with the investment community after
public earnings conference calls.

Table 12
Survey responses to the question: For the purpose of managing your company's narrative, how important are the following activities as they relate to
your company's public earnings conference calls?
% of respondents who answered

Responses Average rating Significantly greater than Very important (5 or Not important
6) (0 or 1)

(1) Developing a script for the presentation portion of the call 5.65 2–10 92.56 1.38
(2) Preparing a list of possible questions and answers 5.26 3–10 81.63 3.12
(3) Private “call-backs” with the investment community to 4.82 4–10 70.54 4.85
clarify information or answer questions after the call
(4) Developing a strategy for handling unanticipated questions 4.51 5–10 59.62 7.45
(5) Rehearsing the call 3.90 8–10 49.22 18.43
(6) Reviewing the call after it is over 3.77 8–10 37.61 11.44
(7) Selecting the day and time for the call 3.70 9–10 36.98 13.89
(8) Prioritizing participants within the Q&A queue during the 3.50 9–10 35.71 19.51
call
(9) Establishing a pre-approved list of individuals allowed to ask 2.76 10 28.12 36.46
a question on the call
(10) Private phone calls with the investment community after the 1.78 – 16.23 59.34
earnings release but before the public earnings conference
call
Total possible N = 578

Column 1 reports the average rating, where higher values correspond to greater importance. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating importance of 5 or 6 (0 or 1).

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conference calls.
We asked three additional “filtering” questions that determined which survey questions we presented to the participating IROs.
We first present results to these questions and explain below how the responses were used to selectively administer subsequent
questions to relevant IROs. As reported in Panel B of Table 11, we asked whether all individuals in the conference call queue are
allowed to ask their question on the public call. About 58% of IROs said yes. Our cross-sectional tests reveal that IROs employed by
companies with at least 5% of their stock owned by hedge funds are significant less likely to allow all individuals in the queue to ask
their question, consistent with IROs’ concern about the type of question investors with the ability to short the stock might ask in a
public setting. Further, as reported in Panel C of Table 11, we asked whether individuals in the queue are selected on a first-come,
first-served basis, and found that 41% of companies manage the conference call queue in this way. In the online appendix, we report
that the average (median) conference call queue consists of 10.21 (8.00) sell-side analysts, 3.84 (0.00) institutional investors, and
0.39 (0.00) members of the business press. Collectively, our findings provide insights into the composition and management of the
conference call queue, which is otherwise unobservable to researchers.
We asked one final “filtering” question to determine if the IRO's company typically conducts private “call-backs” following the
public call (Panel D of Table 11). About 82% of IROs indicate that they typically do so, and cross-sectional tests indicate that IROs
employed by companies that issue earnings guidance, and those for whom equity-based compensation is relatively important, are
more likely to conduct private “call-backs.”

4.5.2. For the purpose of managing your company's narrative, how important are the following activities as they relate to your company's
public earnings conference calls?17
We asked about the importance of various activities related to preparing for the public earnings conference call, including
developing a script (Lee, 2016), rehearsing the call with management, selecting the day and time of the call, and soliciting input from
investors and analysts about the topics they want addressed on the call. We also asked about the importance of reviewing the call
with company management after it has concluded.
IROs indicate that four of the five most important activities related to public earnings conference calls relate to preparing for the
call, including developing a script for the presentation portion of the call, preparing a list of possible questions and answers, de-
veloping a strategy for handling unanticipated questions, and rehearsing the call. The emphasis IROs place on conference call
preparation is consistent with their view that conference calls are the most important mechanism for conveying their company's
message to institutional investors (see Table 2) and the most important determinant of their performance evaluation (see Table 7).18
IROs also say that private “call-backs” with the investment community after the conclusion of the call are also important, with
70% saying they are very important. We note that, as reported in Panel D of Table 11, about 82% of IROs conduct private “call-backs”
after the conclusion of conference calls, and we shed further light on this topic in Table 14.
During our interviews, we asked IROs how they prepare for public earnings conference calls. One IRO shared the following:
“When I travel with my management team, I literally, on my laptop, type up every question that gets asked. Then I code them by
category, so I know what questions are being asked. I track trends and investor concerns and investor likes by doing that…[Then] my
senior management and I discuss potential questions and prepare for them. I can't think of a time when we've been broadsided.”
Another IRO said, “I have three prep meetings. The first prep meeting is with me and other financial people, our controller and our
financial planning and analysis manager. The three of us sit down and discuss what's happening this quarter, what happened last
quarter, and what do we need to talk about and make clear to people. And then prep #2 involves the CFO and the CEO and myself.
We go through a first draft of the script. And then we do one more meeting a couple of days before the call. We finalize everything and
then we record our prepared remarks the day before our call.”
Based on the finding that 16% (40%) of IROs reported that private phone calls with the investment community after the earnings
release but before the public earnings conference call are very important (at least somewhat important), we asked IROs about these
calls during our interviews. Some IROs suggested they avoid these types of calls. For example, one IRO said, “I would never take a call
between the release and the conference call.” Others said they take calls during this time period. For example, one IRO said, “We put
all that information out, and they'll call. What you'll learn is what is creating confusion, what don't they understand, what needs more
clarification, what are the hot-button topics. It gives you better insight into what's likely to come up on the call, and you'll be in a
position to give better answers.” Another IRO said, “We put out our earnings release two hours before the call ... I'm sitting at my desk
in that time, and I'll have emails back and forth with the analysts, where they will share their quick observations, or they'll have a
clarifying question about something. But I'm not going to share anything that isn't already in the press release or in the public
domain.” Finally, one IRO suggested that when a company announces bad news in an earnings release, “The company can talk to the
analysts at that point and basically guide the analysts to help manage the public call…If I can call some of my investors or analysts
before the public call, then the analyst doesn't ask me a really tough, embarrassing question in public.”

17
We presented this question only to IROs who answered “yes” to the question “Does your company host public earnings conference calls?”
presented in Panel A of Table 11.
18
It may seem surprising that only a minority of IROs say prioritizing participants with the Q&A queue during the call (36%) and establishing a
pre-approved list of individuals allowed to ask a question on the call (28%) are very important activities; however, many companies allow everyone
in the queue to ask a question or select people in the queue on a first-come, first-served basis (see Table 11), making these activities less relevant for
some IROs.

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L.D. Brown et al. Journal of Accounting and Economics 67 (2019) 58–79

4.5.3. After they enter the queue, how likely would the following individuals be to be selected to ask their question during the Q&A portion of
your company's public earnings conference calls?19
Prior research documents that sell-side analysts are more likely to ask a question during a public earnings conference call if they
have a favorable stock recommendation for the company (Mayew, 2008; Mayew et al., 2013). These findings raise interesting
questions about other attributes of sell-side analysts and institutional investors that possibly impact their likelihood of being allowed
to ask a question on the call.
IROs indicate that sell-side analysts with considerable experience covering their company are very likely to be selected from the
queue to ask a question on a public earnings conference call, with 87% of IROs saying they are very likely to select these analysts. This
finding is consistent with the results reported in Tables 3 and 8, which underscore the importance to IROs of having experienced
analysts covering the company. We also find that analysts who issue stock recommendations (earnings forecasts) above the consensus
are more likely to be selected to ask a question than are those whose stock recommendations (earnings forecasts) are below the
consensus, consistent with the finding in the literature that company management rewards favorable analysts with conference call
access (Mayew, 2008). Institutional investors with a large position in the company are more likely to be selected than those employed
by a hedge fund, consistent with research that shows investors with a long position in the company's stock are favored relative to
those with a shorter investment horizon and the potential to short the firm's stock (Call et al., 2017).
In our interviews, one IRO addressed an interesting element of the “theater” of public earnings conference calls. He said, “The sell-
side analysts are sitting there with their IMs and they're IM'ing the buy side. The buy side is texting them saying, ‘Ask them about X, Y,
and Z’ or ‘That last answer was BS; push them on this again.’ The buy side doesn't want to be on the call and show anybody their
cards. So the whole thing is kabuki…Guys that have been around the block long enough know this, and everybody understands it. It's
like sell side gets on, sell side drives the Q&A, management answers Q&A. But everybody knows it's a bit of kabuki.”
A different IRO indicated he prioritizes experienced analysts: “We have a handful of guys and gals who've been with us for as long
as we've been public, and we tend to kind of give them pole position in the Q&A.” Another IRO spoke about the risks of putting an
investor on the call during the Q&A session: “The horror stories I've heard is when people put investors live on the call because
investors have an agenda. They're not just trying to learn and fix their models. They might have an ax to grind.”
We asked IROs about actively managing the ordering of participants in the Q&A session. One IRO said, “I will move someone I
know is a jerk so that they don't end the call on a sour note.” Consistent with evidence in the literature about analysts with a positive
view receiving a higher priority (Mayew, 2008; Mayew et al., 2013), one IRO said, “If an analyst is going to get on there and say
something negative, he's going to the bottom of the list. But if I have an opportunity, I'm going to let the people who have a ‘buy’ on
me ask questions first because they're going to set the tone for the call.” Finally, one IRO summed up the importance of controlling the
tone of the Q&A session: “At the end of the day, transparency is all well and good, but that shouldn't come at the expense of the
company controlling the dialogue on the call to the best of our ability.”

4.5.4. How likely would you be to initiate a private “call-back” with the following individuals shortly after a public earnings conference call?20
Private “call-backs” are conversations between key members of the company's management team (including the IRO) and select
individuals in the investment community. These calls typically begin immediately after the public call concludes and take place over
several days following the public earnings call. They provide an opportunity for investors and analysts to ask detailed questions and
allow management the opportunity to clarify any information discussed on the public call. Even though these calls are unobservable
to researchers, they potentially represent a valuable flow of information from companies to the investment community at a very
critical time (shortly after earnings are announced and as analysts are working to revise their forecasts and recommendations).
While private “call-backs” are a regular feature of earnings season (about 82% of IROs report that their company typically
conducts “call-backs,” see Panel D of Table 11), these conversations do not represent a Reg FD violation unless company management
selectively discloses material, nonpublic information. Company management is free to “correct historical facts that were a matter of
public record” and communicate “inconsequential data which, pieced together with public information by a skilled analyst with
knowledge of the issuer and industry, helps form a mosaic that reveals material nonpublic information.”21
A key difference between being selected to ask a question on a conference call and being selected for a “call-back” is that
communication on conference calls is public, whereas conversations that take place on “call-backs” are private, by definition.
Company management has incentives to screen sensitive or difficult questions on the public call, and investors are sometimes re-
luctant to ask questions publicly for fear of tipping their hand about their views on the stock (Brown et al., 2016). Our findings are
consistent with these incentives.
Specifically, while investors with a large investment in the company are not among the individuals likely to be selected to ask a
question on the public call (see Table 13), Table 14 reveals that they are the most likely group to be selected for a private “call-back”

19
We present this question only to IROs who answered “yes” to the question “Does your company host public earnings conference calls?” and
“no” to the questions “Are all individuals who enter the queue typically allowed to ask their question during the Q&A portion of your company's
public earnings conference calls?” and “Does your company select participants from the queue on your public earnings conference calls on a first-
come, first-served basis?” from Table 11, Panels A, B, and C, respectively.
20
We presented this question only to IROs who answered “yes” to the question “Does your company host public earnings conference calls?” and
“yes” to the question “Does your company typically conduct private ‘call-backs’ with the investment community after your public earnings con-
ference calls?” from Table 11, Panels A and D, respectively.
21
https://www.sec.gov/divisions/corpfin/guidance/regfd-interp.htm

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Table 13
Survey responses to the question: after they enter the queue, how likely would the following individuals be to be selected to ask their question during the Q&A portion of your company's public earnings
conference calls?
% of respondents who answered

Responses Average rating Significantly greater than Very likely (5 or 6) Not likely (0 or
1)

(1) Sell-side analysts who have considerable experience 5.46 2–12 87.29 1.66
covering your company
(2) Sell-side analysts whose stock recommendations for your 4.71 3–12 66.29 6.74
company are substantially above the consensus

76
(3) Sell-side analysts whose earnings estimates for your 4.54 6–12 60.67 7.30
company are substantially above the consensus
(4) Sell-side analysts who are Institutional Investor All-Stars 4.35 9–12 54.19 10.61
(5) Sell-side analysts who were not selected to ask a question on 4.32 9–12 56.98 11.73
your company's most recent conference call the public
earnings conference call
(6) Sell-side analysts whose earnings estimates for your 4.23 9–12 53.63 10.61
company are substantially below the consensus
(7) Sell-side analysts whose brokerage provides underwriting 4.23 9–12 56.42 12.85
services for your company
(8) Sell-side analysts whose stock recommendations for your 4.23 9–12 55.06 10.67
company are substantially below the consensus
(9) Individuals whose questions you anticipate the CEO or CFO 3.09 11–12 38.55 35.20
would be willing to answer
(10) Institutional investors who have a relatively large 2.84 11–12 36.87 40.22
investment in your company
(11) Institutional investors who work for a hedge fund 1.65 12 10.19 58.29
(12) Members of the business press 0.40 – 3.35 91.06
Total possible N = 181

Column 1 reports the average rating, where higher values correspond to greater likelihood. Column 2 reports the results of t-tests of the null hypothesis that the average rating for a given item does not
exceed that of any other item. We report the rows for which the average rating significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-
values to correct for multiple comparisons. Column 3 (4) presents the percentage of respondents indicating likelihood of 5 or 6 (0 or 1).
Journal of Accounting and Economics 67 (2019) 58–79
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Table 14
Survey responses to the question: How likely would you be to initiate a private “call-back” with the following individuals shortly after a public
earnings conference call?
% of respondents who answered

Responses Average rating Significantly greater than Very likely (5 or 6) Not likely (0 or
1)

(1) Institutional investors who have a relatively large 5.11 3–11 80.35 6.48
investment in your company
(2) Sell-side analysts who have considerable experience 5.06 3–11 78.40 5.62
covering your company
(3) Sell-side analysts whose earnings estimates for your 4.62 7–11 66.88 9.59
company are substantially above the consensus
(4) Sell-side analysts whose stock recommendations for your 4.59 7–11 66.52 10.43
company are substantially above the consensus
(5) Sell-side analysts whose earnings estimates for your 4.58 7–11 65.65 10.22
company are substantially below the consensus
(6) Sell-side analysts whose stock recommendations for your 4.55 7–11 65.73 10.85
company are substantially below the consensus
(7) Individuals who were in the queue on the public call but did 4.18 10–11 58.01 17.32
not have a chance to ask a question
(8) Sell-side analysts whose brokerage provides underwriting 4.10 10–11 55.70 18.20
services for your company
(9) Sell-side analysts who are Institutional Investor All-Stars 4.08 10–11 55.31 17.35
(10) Institutional investors who work for a hedge fund 3.56 11 37.01 17.32
(11) Members of the business press 1.72 – 13.88 58.57
Total possible N = 463

Column 1 reports the average rating, where higher values correspond to greater likelihood. Column 2 reports the results of t-tests of the null
hypothesis that the average rating for a given item does not exceed that of any other item. We report the rows for which the average rating
significantly exceeds the average rating of the corresponding items at the 5% level, and use Bonferroni-Holm-adjusted p-values to correct for
multiple comparisons. Column 3 (4) presents the percentage of respondents indicating likelihood of 5 or 6 (0 or 1).

after the conclusion of the public call. Similarly, while institutional investors employed by a hedge fund are relatively unlikely to
receive a “call-back,” they are more likely to be selected for a “call-back” than for a question on the public call (average rating in
Table 13 = 1.65, average rating in Table 14 = 3.56, untabulated p < 0.001).
While analysts with stock recommendations and earnings forecasts above the consensus receive preferential treatment on the
public call, they are not more likely to be selected for a private “call-back” than are analysts with below-consensus views of the
company. This finding suggests the preferential treatment favorable analysts receive on the public call is driven by management's
desire to manage the tone of the Q&A portion of the call, rather than by a desire to selectively provide access to management for
analysts with a favorable view of the company. Our cross-sectional tests reveal that IROs employed by companies that issue earnings
guidance are more likely to initiate a private “call-back” with analysts whose earnings forecasts are substantially above the consensus,
suggesting that IROs use private conversations to rein in outlier analysts whose forecasts exceed company guidance. Similar to the
results for the public call, experienced analysts are common recipients of a private “call-back” (78% of IROs are very likely to select
these analysts for a “call-back”). In addition, consistent with several other survey findings, members of the business press are not a
favored group for these calls.
IROs also spoke about how they prioritize the ordering of private call-backs. One IRO said, “People who are going to get the call
back first are the people who are currently the largest investors in our company, because we want them to hold the stock and not sell
it, maybe buy more.” Another IRO said, “The buy side gets priority, absolutely, because they've got decisions to make about capital
allocation, and those need to be addressed.”

5. Limitations and caveats

While survey research yields the benefits described earlier in our paper, it is also subject to certain limitations. In this section, we
discuss some of the limitations and caveats related to our study.

5.1. Internal validity of survey responses

One concern when conducting surveys is the possibility that the responses do not reflect the participants’ true views and practices.
To examine this possibility, we included multiple questions that address the same underlying construct. If survey participants respond
similarly to related questions presented in different parts of the survey, it increases confidence that their answers are reliable. To
address this issue, we examine the consistency of IROs’ responses to three related questions.

1. The likelihood of granting management access to sell-side analysts who are Institutional Investor All-Stars (Table 8).

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2. The likelihood of allowing sell-side analysts who are Institutional Investor All-Stars to ask a question during a public earnings
conference call (Table 13).
3. The likelihood of initiating a private “call-back” with sell-side analysts who are Institutional Investor All-Stars (Table 14).

The extent to which a given IRO gives All-Star analysts access to management is likely to be similar across all three settings. We
assess the consistency of responses to these three questions using Cronbach's alpha, which ranges from 0 to 1, and where values above
0.70 are generally considered to suggest strong internal consistency (Nunnally, 1978). Cronbach's alpha for these three questions is
0.746, suggesting the IROs provided reliable answers to the survey.

5.2. Caveats

Our study is subject to several caveats. First, one question (Table 5) asks IROs to assess the influence of the typical IRO vis-à-vis
the typical CFO on various firm disclosures. We note that 34% of IROs have daily contact with their CFO, and 60% have at least
weekly contact with the CFO (Bank of New York Mellon, 2013). Furthermore, more than 93% of IROs report directly to the CEO or
CFO (Table 1). Thus, we believe most IROs can appropriately respond regarding CFOs’ role in shaping these corporate disclosures.
Nevertheless, we recognize that not all IROs are well positioned to assess the activity of CFOs.
Second, although we framed this question in terms of “the typical IRO” in an effort to mitigate self-promotion bias, we recognize
that IROs may have incentives to overstate their role in shaping these disclosures. As a result, we interpret these findings with
caution. We note, however, that when we asked in a separate question about the determinants of their superior's assessment of their
job performance (Table 7), the two most important determinants that they reported relate to their role in preparing firm disclosures
(i.e., on conference calls or in other disclosures). Even if IROs have incentives to overstate their influence over various firm dis-
closures, they are unlikely to have incentives to overstate the role of disclosures in shaping their performance assessment, which helps
mitigate concerns about biased responses.
Third, the question reported in Table 10 asks about possible Reg FD violations, which may be a sensitive issue for survey
participants. However, rather than asking IROs about their own experience fielding questions from sell-side analysts and institutional
investors (and issuing 8-Ks), we ask IROs how often they believe these issues emerge for the typical IRO. Making this question less
personal should solicit responses that are more forthcoming and reflective of actual practice. However, we recognize that some IROs
may have incentives to understate the frequency of these events. Relatedly, some IROs may be reluctant to indicate that they contact
specific sell-side analysts for the purpose of managing earnings expectations (see the online appendix) or that their ability to manage
analyst expectations is an important determinant of their internal performance evaluation (Table 7).
Finally, we acknowledge that our main survey findings provide descriptive evidence rather than tests of specific theories.
However, we concur with Gow et al. (2016) who state that “accounting research can benefit substantially from more in-depth
descriptive research” (p. 499), and Bloomfield et al. (2016) indicate that, “Surveys offer a great opportunity for contextualization,
generating rich descriptive data about practitioners’ beliefs and preferences and illuminating previously unhypothesized facts and
associations that offer opportunity for theory building” (p. 377).

6. Conclusion

We survey investor relations officers at U.S. public companies in an effort to deepen our understanding of their role in managing
companies’ communications with sell-side analysts and institutional investors and in overseeing corporate disclosures. Our survey
examines many topics of interest on which IROs are well suited to provide valuable insights. We ask questions related to IROs’
interactions with sell-side analysts and institutional investors, their role in controlling access to senior management, the importance
of various types of disclosures for communicating the company narrative, their influence on various corporate disclosures, and what
takes place before, during, and after public earnings conference calls.
We find that public earnings conference calls are the single most important venue for management to convey their company's
message to institutional investors, and that preparing for and managing these calls are the most important determinants of IRO job
performance. IROs also indicate that private phone calls are more important than 10-K/10-Q reports, on-site visits, and management
guidance for conveying their company's message, and more than 80% of IROs report that they conduct private “call-backs” with sell-
side analysts and institutional investors following public earnings conference calls.
Our study makes numerous contributions to several literatures. First, it sheds light on the influence IROs have on corporate
disclosure. Second, it provides new insights on the value, nature, and timing of private communication between IROs, analysts, and
investors. Third, it provides new evidence on the degree of “theater” involved in public earnings conference calls. Importantly,
because IROs are often behind the scenes and because no archival databases provide data specifically related to the activities of IROs,
our survey provides depth to our understanding of the process of investor relations that would be difficult to obtain otherwise. Our
study also provides new insights about the value of sell-side analysts from the perspective of corporate investor relations officers, and
we examine various topics from the perspective of company management that are typically studied from a different perspective (e.g.,
public earnings conference calls). Finally, our findings create opportunities for subsequent research in the investor relations, sell-side
analyst, institutional investor, and disclosure literatures.

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Supplementary materials

Supplementary material associated with this article can be found, in the online version, at doi:10.1016/j.jacceco.2018.08.014.

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