The Effect Of Disclosure Of Corporate Site Visits On Post-earnings Announcement Drift

Corporate site visits is an investor relations activity,during which the security analyst and investor visit the corporate headquarter,talk with the employees,and look over the production facility.The participants are normally brokerage analysts and institutional investors.Individual investors barely have chance to attend corporate site visits.Since July 2012,Shenzhen Stock Exchange(SZSE)firms have been required to disclose a summary of each corporate site visit on the stock exchange's online web portal named Easy IR timely.In contrast,Shanghai Stock Exchange(SHSE)does not require firms to disclose information about corporate site visits.Therefore,there are differences between SZSE and SHSE on regulations regarding corporate site visits information disclosure since July 2012.The SZSE setting can be utilized to study that whether timely disclosure of corporate site visit details improves the efficiency of investors' reactions to earnings information and hence reduce post-earnings announcement drift.Firstly,it is examined that whether the changes in post-earnings announcement drift among the SZSE-listed firms are related to the regulations about disclosure of corporate site visits details in July 2012.The results show that post-earnings announcement drift for SZSE firms significantly decreased after the regulations took effect in July 2012.In order to restrain the influence of overall market information environment and liquidity,the changes of post-earnings announcement drift in SZSE and SHSE are compared.The results indicate that the firms in SZSE exhibit more reduction in post-earnings announcement drift than the firms in SHSE.It is concluded that the information disclosure about corporate site visits in SZSE effectively enhances the information environment of the SZSE-listed firms,improves investors' reaction to information,and thereby reduces post-earnings announcement drift.Moreover,the reduction in post-earnings announcement drift concentrates on the firms that are smallest and least heavily traded.In comparison,the largest and most heavily traded firms do not exhibit significant drift either before or after the execution of the regulation,and do not experience significant reduction in post-earnings announcement drift.Secondly,it is explored that whether disclosure of corporate site visits surrounding the seasonal earnings announcement contributes to the reduction in post-earnings announcement drift.The results imply that when the overall environment remain unchanged,the firms that disclose details of corporate site visits surrounding the earnings announcement do not experience significant reduction in post-earnings announcement drift.On the whole,the timely disclosure of corporate site visits is able to influence investors' reaction to information.In the long run,it can improve firms' information environment effectively and enhance efficiency of capital market.These findings extend the study of corporate site visits and deepen the understanding of the effect of corporate site visits information disclosure on post-earnings announcement drift.The results are also of interest to regulators in the way that they provide direct evidence on the role of corporate site visits in capital market.In addition,the findings contribute to the study regarding post-earnings announcement drift in emerging markets.