Working Papers

“Retail Investor Interactive Platform Activity and Information Asymmetry Among Investors: Should Regulators be Concerned?“  with Zhenhua Chen, Wentao Ren and Phil Zhu

Abstract:  To facilitate retail investors’ communication with firms, regulators in China mandate that firms publicly respond to investor postings made on investor interactive platforms (IIPs). We find that although both investor posts and firm replies reduce information asymmetry among investors, the marginal effect of replies is consistently smaller than that of posts, and this disparity has widened over time. To investigate whether poor-quality and untimely firm replies drive this difference, we use machine learning to classify posts as questions or comments and replies as high or low quality. Our results indicate that replies to question posts are more effective than replies to comment posts in reducing information asymmetry, yet they remain less impactful than the original posts. Additionally, high-quality replies to questions lower information asymmetry more than low-quality replies, and timeliness amplifies this effect, particularly in the early years following the launch of IIPs. However, even timely, high-quality replies to investor questions have a marginal effect of less than one-third that of original investor posts in recent periods, suggesting that IIPs primarily reduce awareness and acquisition costs rather than integration costs. Overall, while regulators may seek to improve reply quality and timeliness, our findings suggest that enhancing investor engagement via posting is likely to have a greater impact on reducing information asymmetry.

“On the Usefulness of Guidance Reports“  with Jedson Pinto and Xiaoxi Wu

Abstract: We examine whether LSEG Guidance Report (GR) data are useful for scholars studying management guidance. We extract the contents of over 23,000 Guidance Reports for S&P 1500 firms. We find 1.735 million guidance instances across 192 items, which far exceeds the 261 thousand instances across 13 items included in the LSEG I/B/E/S Guidance (IG) database that scholars commonly rely on.  IG is a processed subset of GR containing only quantitative guidance that is standardized to be comparable to analyst forecasts. Qualitative (quantitative) GR guidance explains 76% (24%) of the coverage gap. Quantitative GR guidance is less likely to be processed into IG when standardization costs are high and the importance of the guided item to managers and analysts is low. Qualitative and quantitative GR guidance data absent from IG are associated with analyst forecast revisions and market reactions, consistent with GR capturing guidance of economic importance. GR also uniquely identifies disclosure channels and speakers, revealing that nearly one-quarter of guidance occurs outside traditional earnings announcements and that a variety of top management team members deliver guidance. These findings suggest that GR data can enhance academics’ understanding of management guidance beyond what can be learned from IG data alone. [Note: For useful information and assistance with obtaining and extracting GR data, visit: https://www.guidance-reports.com/.  For researchers interested in a contemporary summary of the management guidance literature, see Feng and Lee 2025]