But it’s not some “Wolf of Wall Street-”like effort to get rich by deception. It’s not intentional. In fact, they probably don’t even know they’re doing it.  

Michael Durney, assistant professor of accounting at the Tippie College of Business, said that corporate managers and investor relations officers who present to larger groups are more focused on themselves and their presentation, and this heightened sense of self-awareness means they are less willing to share bad news. 

He said psychology research shows that speakers are more likely to be open and honest in smaller groups, where they can visualize and connect to the individuals. With larger groups, everyone blends into a crowd, and human nature makes us more reticent, especially with bad news.   

Unfortunately, Durney notes this subconscious reluctance has an impact on financial markets. Not all investors can participate in these conferences, roadshows, phone calls, and other private meetings. If managers unintentionally withhold bad news when talking to larger groups, then investors with more private access to management in smaller groups have more information that gives them an edge.   

Durney says such an unlevel playing field goes against the spirit of financial regulation and prompts further consideration of occasional calls to prohibit private meetings between investors and managers altogether.