In-person Site Visits Matter, Even In the Age of AI

Traditionally, site visits were understood as a tool of investors to acquire information from visiting firms, but Robert H. Smith School of Business Associate Professor Sean Cao et al. document that such in-person interactions involve more than information acquisition.

Cao, who is also the director and co-founder of the AI initiative for Capital Market Research, explores the impact of on-site investor visits through his research “Site Visits and Corporate Investment Efficiency,” published in Management Science in April 2024. 

“It’s always helpful for investors to go on-site to make the right investment decisions,” Cao said. He added that there is a lot of information that can be gathered by social media, but visiting in person can help investors see for themselves how the company is run, get a look at the potentially overstocked inventory and get to know the managers.

Cao said prior to this research, it was believed that a site visit was only valuable for the purpose of gathering information. But Cao and his team realized there was a second, and maybe more important, aspect to site visits: monitoring corporate managers through in-person on-site visits. 

“They are actually monitoring the managers to prevent them from overinvesting and wasting resources,” he said. “So it is not just acquiring information but human interaction.”  When visitors see anything wrong during on-site visits, this monitoring role can prevent managers from empire building, resulting in more efficient investments, Cao said.

The implication can extend to the age of AI. Though investors can use AI to analyze text and data, human interaction is something that Cao said AI cannot replace. “The in-person monitoring role means a lot in the age of AI. It’s a ‘human moment’—an in-person interaction,” he said.

Read Cao’s recent work, “Site Visits and Corporate Investment Efficiency,” in Management Science.