The information content of strategic plan presentation of Italian listed companies

In this paper, using the event study methodology, we investigate the effects on stock prices of strategic plan presentations of Italian listed companies to securities analysts and institutional investors. Although the role of strategic plans as communication means and consensus catalysts has been acknowledged theoretically and investigated empirically, the information content of strategic plans presented to analysts and investors has not yet been studied in depth. By considering an event window of 21 days and an estimation window over the 240 days prior to the event, we use the market model to calculate normal returns and measure company’s abnormal returns. Research findings support the idea that strategic plan presentations convey information useful for the valuation of small and medium companies with low analyst following. This sub-sample of companies shows, indeed, very positive and statistically significant ASCAR (average standardized cumulative abnormal returns) from day 0 to day +10. We believe our findings have relevant implications both for theory and practice. Theoretically, they contribute to the literature on strategic plans and voluntary disclosure, providing evidence that not only strategic plan presentations aggregate consensus around company’s strategy, but they also convey valuable information to assess company’s value. Practically, they suggest companies should consider adopting strategic plan presentations as integrated communication devices