Do Executives Use Their Corporate Jets to Go Provide Private Information to Investors?

Abstract

In this study, we use data on the flight paths of corporate jets to assess the likelihood that executives are engaging in private meetings to provide market-sensitive information to large investors ahead of key events, such as announcements of a share buy-back or earnings surprises. We find that shortly before making such market announcements, executives are indeed more likely to fly to places where their investors are located. Moreover, we find that investors seem to act on information provided to them: following the meetings, they tend to increase their shareholdings, in comparison to investors that have not been visited. Through these findings, we advance the literature that takes a socio-political perspective on corporate governance, including the relations between senior executives and company investors. We also contribute to the literature on corporate misconduct.