Information Acquisition Activities Research Articles

The Geography of Information Acquisition

Using detailed data about company visits by Chinese mutual funds, we provide direct evidence of mutual fund information acquisition activities and the consequent informational advantages mutual funds establish in local firms. Mutual funds are more likely to visit local and nearby firms, though ease of travel between fund and firm locations alleviates geographic distance constraints. Company visits by mutual funds are related to both fund trading activities and fund trading performance. The relation between company visits and fund trading performance is particularly strong in newly initiated stock positions. Consistent with this result, we find evidence of intensive information acquisition by mutual funds in stocks not in their current portfolios. Our results suggest that mutual fund local preference in portfolio choice is at least partially driven by geographic constraints of information acquisition and the ensuing information asymmetry.

Is There Information Content in Information Acquisition?

In this study, we examine whether investors’ actions to acquire accounting information are predictive of future firm performance because these actions partially reveal investors’ private expectations of this performance. Using a database of EDGAR downloads, we find some evidence that information acquisition of accounting reports by EDGAR users is, on average, predictive of future firm performance. We then determine the identity of the EDGAR user and examine whether different users’ private expectations will be relatively more predictive of subsequent performance. We find that the information acquisition activities of more sophisticated institutional users (e.g., hedge funds, investment banks) are more strongly associated with future performance than are those of less sophisticated retail users. Finally, we find that information acquisition by sophisticated institutions is a leading indicator of their equity holdings. In summary, this study provides evidence of predictive information embedded in sophisticated investors’ actions to acquire accounting information.

Company Visits and Stock Price Crash Risk: Evidence from China

We investigate the impact of company visits, an increasingly important type of information acquisition activity for analysts and institutional investors, on stock price crash risk. With a sample of Chinese listed companies during 2009–2017, we find that firms that are visited more are associated with less future crash risk. This finding is robust to additional tests with firm fixed effects, with alternative crash risk proxies, and still holds after addressing the endogeneity concern, and is more pronounced for firms facing more incentives or less constraints to hide bad news. Moreover, company visits exhibit more impact on crash risk if more firm-specific information is discovered during visits, and if visits are conducted by analysts instead of institutional investors. The effect of company visits mostly exhibits in the first half of the next year. These findings support that company visits mitigate crash risk by discovering and disseminating firm-specific information.

Can non-work-related social media use benefit the company? A study on corporate blogging and affective organizational commitment

Intra-organizational social media systems, such as corporate blogging, are increasingly implemented in companies. Although it is usually expected that such systems are used for sharing work-related information, employees also tend to use them for non-work-related purposes, such as posting leisure-related information, sharing life experiences, and exchanging emotional feelings. Whether the non-work-related use of corporate blogging is beneficial or harmful to an organization has yet to be adequately explored. Based on the literature on information systems and organizational behavior, we propose that although non-work-related corporate blog use does not directly improve employee work efficiency, it may increase employees’ affective organizational commitment. Accordingly, research hypotheses are proposed and tested using data collected from a large telecommunication company. The results show that non-work-related content contribution and information acquisition activities both have significant positive impacts on the affective commitment of employees. The theoretical contributions and managerial implications of the findings are discussed.

Information Acquisition and Expected Returns: Evidence from EDGAR Search Traffic

Using a novel dataset containing investors' access of company filings through the SEC's EDGAR system, we show that the abnormal number of IPs searching for firms' financial statements strongly predicts future stock returns and firm fundamentals. A long-short portfolio based on our measure of information acquisition activity generates a monthly abnormal return of 80 basis points that is not reversed in the long run. Consistent with theories of endogenous information acquisition, the return predictability is more pronounced for firms with larger and lengthier financial filings that are more costly to process, and for IPs searching current and historical filings simultaneously. Our findings suggest investors' costly information acquisition activities reveal their private expectation of firm value.

The governance role of institutional investors in information disclosure

PurposeAs an important participant in capital market, institutional investors play a principal role in improving corporate governance. Most existing studies have focused on institutional ownership and its economic consequences. Nevertheless, they have not provided sufficient insight on the governance behavior of institutional investors as well as the underlying incentive mechanism. This paper aims to analyze the governance role of institutional investors in information disclosure and provide related evidence.Design/methodology/approachThe authors propose a novel theory to analyze the institutional investors’ behavior of active governance and shows that such behavior significantly improves the quality of corporate information disclosure. The authors then conduct an empirical test by using the hand-collected data of institutional investors’ corporate visits during 2009-2014 in ChiNext.FindingsThis paper finds that the firms visited by institutional investors are more likely to have a greater tendency of disclosing more information than the firms that have never been visited. In particular, a higher frequency of visits or a larger number of participating institutional investors leads to a higher degree of disclosure. Consistent with the notion that on-site visits endow institutional investors with more frequent and active interaction with the firms, the authors find that the results are stronger for firms which are visited on-site, when compared with other information acquisition activities such as online meetings, conference calls and investor meetings. In addition, the effect of a site visit is greater when the site visit is conducted by securities companies or funds rather than insurance companies or QFIIs. Finally, the test of the direction of causality suggests that visits conducted by institutional investors leads to more information disclosure, rather than the reverse. Collectively, these results show that institutional investors’ participation enhances corporate information disclosure.Originality/valueThis paper explores the internal mechanism that institutional investors affect corporate governance by improving information disclosure through their corporate visits. This is the first study to investigate the influence of institutional investors’ corporate visits and their economic consequences.

Information Acquisition During a Descending Price Auction with Asymmetrically Informed Players

This paper considers equilibrium behavior in a descending price auction with two players that are asymmetrically informed. The ”informed” player knows his valuation while the other does not. The uninformed player can acquire information about his valuation with a positive cost during the auction. We assume that the information acquisition activity is covert and we characterize the equilibrium behavior in the setting where players’ valuations are independently and identically distributed. We derive the explicit ”inverse bid” functions in the case of the uniformly distributed valuations and provide a revenue comparison between the ascending and descending price auctions in this case.

The Value of Scattered Information

We analyze a model in which a security’s value is composed of several distinct pieces and private information about those pieces is scattered among the investor population. Surprisingly, as information is scattered into smaller distinctly informative pieces, even if the acquisition cost per piece does not decrease, endogenous information acquisition activity in the economy can increase, alleviating information free-riding in financial markets. This relationship holds despite the naturally decreasing informativeness of each piece. Our findings offer a new explanation for empirical facts associated with the “diversification discount” puzzle and new insights on information markets with an information monopolist.

Seeing is believing: analysts’ corporate site visits

This study examines the impact of corporate site visits on analysts’ forecast accuracy based on a sample of such visits to Chinese listed firms during 2009–2012. We find that analysts who conduct visits (“visiting analysts”) have a greater increase in forecast accuracy than other analysts. Consistent with the notion that site visits facilitate analysts’ information acquisition through observing firms’ operations, we find that the results are stronger for manufacturing firms, firms with more tangible assets, and firms with more concentrated business lines. Moreover, we find that the effect of a site visit is greater when the site visit is an analyst-only visit, when the current visit is preceded by fewer visits, and when visiting analysts are based far from the visited firms. Furthermore, we find that site visits partially mitigate nonlocal analysts’ information disadvantage. Collectively, these results indicate that site visits are an important information acquisition activity for analysts.

Antecedents to export information generation: a cross-national study

Purpose – The purpose of this paper is to examine the factors that enhance export decision-makers’ generation of export information, using a non-linear approach and a multi-country context, and so provide export decision-makers with empirically based guidelines on how to maximize their information acquisition efforts. Design/methodology/approach – A broad perspective on export information generation is adopted, including marketing research, export assistance, and market intelligence. The model of antecedents to information generation is tested in three studies (USA, Austria, New Zealand, respectively) using structural equation modeling techniques. Multigroup and hierarchical analysis is performed to assess cross-national invariance of relevant measures, and quadratic effects. Findings – The findings show that the predictors of export information generation vary across the three countries studied, and that many of the relationships are non-linear. Research limitations/implications – This study contributes to the export marketing literature by developing the understanding of how exporters can develop greater knowledge of information sources on which to build export decisions, and the conditions necessary for enhanced export information acquisition activity. The findings highlight that future research should consider non-linear relationships and the examination of the outcomes of export information generation in a cross-national setting. Practical implications – The study findings advocate that practitioners (exporters and advisers) tailor their export information generation efforts to the different country needs. Originality/value – This research responds to a call for more theoretically based studies on antecedents to export information generation, concurrent with the use of more robust statistical methods.

Contextual Deliberation and Preference Construction

Choices can be context dependent. This empirical finding is usually invoked to suggest that preferences are constructive and susceptible to decision environment. Yet preference construction can be systematic and endogenous. This paper develops the theory of contextual deliberation as a potential explanation for behavioral phenomena of preference construction. When preference ordering in a choice set is ex ante unknown and state dependent, decision makers can engage in information acquisition activities (i.e., deliberation) before choice to improve knowledge about the state-dependent preference ordering. Choice context can thus influence ex post preference ordering through affecting the incentive to deliberate. Consequently, contextual deliberation may lead to preference construction and give rise to seemingly irrational behavioral phenomena such as the compromise effect and the choice overload effect. The theory of contextual deliberation also yields predictions that can be empirically tested to identify from other alternative explanations. This paper was accepted by Eric Anderson, marketing.

Contextual Deliberation and Preference Construction

Choices can be context dependent. This empirical finding is usually invoked to suggest that preferences are constructive and susceptible to decision environment. Yet preference construction can be systematic and endogenous. This paper develops the theory of contextual deliberation as a potential explanation for behavioral phenomena of preference construction. When preference ordering in a choice set is ex ante unknown and state dependent, decision makers can engage in information acquisition activities (i.e., deliberation) before choice to improve knowledge about the state-dependent preference ordering. Choice context can thus influence ex post preference ordering through affecting the incentive to deliberate. Consequently, contextual deliberation may lead to preference construction and give rise to seemingly irrational behavioral phenomena such as the compromise effect and the choice overload effect. The theory of contextual deliberation also yields predictions that can be empirically tested to identify from other alternative explanations.

Are Investors’ Corporate Site Visits Informative?

Corporate site visits are an important type of information acquisition activity, but their usefulness is not well understood, partly due to a lack of data. Using a unique dataset of corporate site visits in China, we analyze the information content of corporate site visits. Our main findings are as follows. First, we document a significant market reaction around corporate site visits and it is stronger for group visits, visits conducted by mutual fund managers, visits covering firm-specific topics, and visits to firms with poor information environments. Second, we find that stock returns around site visits are positively associated with forthcoming earnings news. Third, we find that the market reaction is stronger for site visits to manufacturing firms, consistent with one unique attribute of site visits, namely, the observation of firms’ operations and facilities. Fourth, we provide direct evidence of the usefulness of site visits by documenting that the changes in the stock holdings of visiting funds are more positively correlated with future firm performance than those of non-visiting funds. Finally, we find weak evidence that the informativeness of site visits is partially driven by selective disclosure; the market reaction to site visits is stronger when they are initiated by firms. Overall, our study contributes to the literature by presenting the first systematic evidence on the information role of corporate site visits.

Seeing is Believing: Do Analysts Benefit from Site Visits?

This study examines the impact of site visits on analysts’ forecast accuracy based on a sample of analysts’ corporate site visits to Chinese listed firms during 2009-2012. Using a difference-in-differences approach, we find that analysts who conduct site visits (“visiting analysts”) have a greater increase in forecast accuracy than non-visiting analysts. Consistent with the notion that site visits facilitate analysts’ information acquisition through observing firms’ operations, we find that the results are stronger for manufacturing firms, for firms with more tangible assets, and for firms with more concentrated business lines. In addition, we find that the effect of a site visit is greater when the site visit is an analyst-only visit, when the current site visit is preceded by fewer site visits, and when visiting analysts are located far from the visited firms. Moreover, visiting analysts’ forecast revisions are accompanied by a higher market response. Furthermore, we find that site visits partially mitigate non-local analysts’ information disadvantage. Lastly, our determinant analysis shows that the likelihood of analysts’ site visits increases with the expected benefits and decreases with the costs adherent to conducting site visits. Collectively, these results indicate that corporate site visits are an important information acquisition activity for analysts.

Do External Knowledge Sourcing Modes Matter for Service Innovation? Empirical Evidence from South Korean Service Firms

To source external knowledge, firms in the service area use various sourcing modes simultaneously suitable for their internal needs or external environments. Each external knowledge sourcing mode has distinctive characteristics, and as such, they can offer different advantages and/or disadvantages to the firms. Thus, the effects of external knowledge sourcing on service innovation may vary depending on the sourcing modes. The current study aims to empirically examine the different effects of various external knowledge sourcing modes on service innovation. The study identifies three external knowledge sourcing modes: joint development, technology purchasing, and external information acquisition. Three hypotheses are established to examine the relationships between the extent of utilizing each mode and service innovation performance in terms of new service introduction. The data for analysis are selected from the “Korean Innovation Survey 2006: Service Sector” (KIS 2006). It is regarded as South Korea's version of the Community Innovation Survey (CIS). The KIS 2006 data set covers joint development, technology purchasing, and external information acquisition activities of corporations in the service sector in South Korea. The study empirically analyzes the data set using a negative binomial regression model. The results first demonstrate that the extent of the joint development has an inverted U‐shaped relationship with the service innovation performance. Second, the results indicate that, on the other hand, service innovation performance decreases with the increase to the extent of the technology purchasing when the extent is below the threshold. On the other hand, it increases with the increase to the extent of the technology purchasing; this occurs when the extent exceeds the threshold. Third, the results show that external information acquisition has a positive effect on service innovation performance. These findings support that the extent of utilizing each mode has different relationships with service innovation performance. The findings suggest that service firms need to utilize joint development at a moderate level, active technology purchasing, and as much external information acquisition as possible to maximize service innovation performance. In practice, this finding can help managers of service firms select appropriate external knowledge sourcing modes and determine the optimum level of use for each mode. This study also can help firms build up strategies for external knowledge sourcing.

Information acquisition during a Dutch auction

lmestynyt myos Journal of Economic Theory 2013 seka Bank of Finland research discussion papers 7/2010.

Information Acquisition During a Dutch Auction

In this paper we consider equilibrium behavior in a Dutch (descending price) auction where the bidders are uninformed of their valuations with probability 1-q and can acquire information about their valuation at a positive cost during the auction. We assume that the information acquisition activity is covert. We characterize the equilibrium behavior in a setting where bidders are ex ante symmetric and have independent private values. We show that, if the number of bidders is large, the Dutch auction produces more revenue than would a first price auction.

Eye Movements as an Indicator of Situation Awareness in a Flight Simulator Experiment

This article discusses the potential for eye movements as a means to assess situation awareness (SA) in a flight simulator setting. In a scenario, SA was hampered by introducing a system malfunction in the form of a fuel leak that resulted in a fuel imbalance. Twelve airline pilots participated in the experiment. An eye tracker was used to track the pilot's visual scanning behavior across the areas of interest (AoIs) in the cockpit. Differences in attentional focus and scanning entropy were observed when the crews searched for the malfunction. The results provided insight into the use of fixation rates and dwell times as information acquisition indicators (Level 1 SA), and the use of entropy as an indicator of new information acquisition activities (Level 3 SA). These findings contribute to the further development and exploration of eye movement analyses as an objective indicator of SA in a civil aviation cockpit setting.

Information acquisition as an American option

Many information acquisition activities can be postponed within a predefined time-frame. In uncertain situations, the option to postpone the information acquisition to a later, more favorable time may create value. We discuss the value that comes from holding an option to acquire information in a time period and suggest a simulation-based numerical approach to calculate the associated value. We discuss that the value of information in a time period may be very different from the value of information in a single point in time. This value is closely linked to the uncertainty of the decision outcomes over the time period.

An examination of consumer browsing behaviors

PurposeBrowsing is a common consumer behavior, but it has not been researched extensively. The aim of this paper is to fill some of the gaps in the research.Design/methodology/approachDrawing on literature from different areas, consumers' browsing experiences, browsing patterns, and factors influencing browsing activities are empirically examined. A combination of interviews and shopping trips with informants to examine the issues are used.FindingsThe results show that browsing serves both functional and recreational purposes. Consumers vary by the degree to which they browse functionally or recreationally. Browsing behaviors are influenced by both consumer characteristics and the retail environment. Browsing is a powerful consumer information acquisition activity and has both desired and undesired consequences for consumer purchases. Consumers use various strategies to cope with the undesired consequences.Practical implicationsExploration of browsing patterns and factors influencing these patterns suggests important managerial implications for enhancing desirable browsing and reducing unnecessary browsing.Originality/valueThe conceptualization and findings of this research contribute to two areas of research: consumer information search and consumer shopping behaviors in retail environments. An examination of the role of browsing offers an empirical extension to the information acquisition framework.