Which Institutional Investors Trade Based On Private Information About Earnings And Returns

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Which Institutional Investors Trade Based on Private Information About Earnings and Returns?

Author : Brian J. Bushee
Publisher :
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Which Institutional Investors Trade Based on Private Information About Earnings and Returns? by : Brian J. Bushee

Download or read book Which Institutional Investors Trade Based on Private Information About Earnings and Returns? written by Brian J. Bushee and published by . This book was released on 2011 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent work presents evidence that certain groups of institutional investors are able to trade profitably based on private information about earnings and returns. We contribute to this literature in three ways. First, we test whether certain private information proxies are consistent with the creation and liquidation of positions based on private information. Second, we introduce private information proxies that reflect the size and nature of an institution's position in each portfolio firm. Third, we use a methodology that examines multiple investor characteristics simultaneously at the institution-firm-level. We find that changes in ownership by institutions that have large positions in a specific firm are consistent with trading based on private information. However, other previously-documented proxies for private information produce results that are more consistent with risk-based trading (e.g., investment style, portfolio turnover) or that are insignificant in the presence of the other proxies (e.g., fiduciary type). We also find that informed trading is more prevalent in return-based measures (vs. earnings-based measures) and in smaller firms. Tests for interactions among private information proxies reveal that informed trading is most evident when the large positions in firms are newly initiated and when they are taken by investment advisers and by large institutions. Finally, we find that institutions following growth strategies exhibit momentum trading in positions held less than one year and informed trading in positions held more than one year, suggesting that the information advantages to investment styles accrue over time.

A Better Measure of Institutional Informed Trading

Author : Hui Guo
Publisher :
ISBN 13 :
Total Pages : 57 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis A Better Measure of Institutional Informed Trading by : Hui Guo

Download or read book A Better Measure of Institutional Informed Trading written by Hui Guo and published by . This book was released on 2014 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although many studies show that the presence of institutional investors facilitates the incorporation of accounting information into financial markets, the evidence of informed trading by institutions is rather limited in the extant literature. We address these inconsistent findings by proposing PC_NII, percentage changes in the number of a stock's institutional investors, as a novel informed trading measure. PC_NII is better able to detect informed trading than are changes in institutional ownership (∆IO) -- the measure commonly used in previous studies -- because (1) entries and exits are usually triggered by substantive private information and (2) only a small fraction of institutions have superior information. As conjectured, PC_NII subsumes the information content of ∆IO and other institutional trading and herding measures in the forecast of stock returns, and its strong predictive power for stock returns reflects mainly its close correlation with future earnings surprises. We also show that PC_NII helps address empirical issues that require a reliable measure of institutional informed trading.

Changes in Institutional Ownership and Subsequent Earnings Announcement Abnormal Returns

Author : Ashiq Ali
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Changes in Institutional Ownership and Subsequent Earnings Announcement Abnormal Returns by : Ashiq Ali

Download or read book Changes in Institutional Ownership and Subsequent Earnings Announcement Abnormal Returns written by Ashiq Ali and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study documents an association between changes in institutional ownership during a calendar quarter and abnormal returns at the time of subsequent announcements of quarterly earnings. The result is driven by the portfolio returns of the extreme deciles of changes in institutional ownership, suggesting that institutions trade based on information about future earnings, but that such trading is not widespread. We also find that the difference between earnings announcement returns of the extreme deciles of change in institutional ownership is much greater when change in institutional ownership of a stock is driven by relatively few institutions, measured using the skewness of the distribution of change in institutional ownership of the stock. This result suggests that when fewer differentially informed investors make disproportionately large purchases or sales of stocks, a greater amount of the information on which they base their trades is not impounded in prices until the subsequent earnings announcement. Finally, we show that our results obtain for institutional investors with short-term focus, such as independent advisors, investment companies and insurance companies, but not for institutional investors with long-term focus, such as internally managed pension funds, educational institutions, and private foundations. This result further supports our conclusions regarding informed trading by institutions based on information about forthcoming earnings.

Institutional Investors and Corporate Governance

Author : Theodor Baums
Publisher : Walter de Gruyter
ISBN 13 : 311089338X
Total Pages : 725 pages
Book Rating : 4.1/5 (18 download)

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Book Synopsis Institutional Investors and Corporate Governance by : Theodor Baums

Download or read book Institutional Investors and Corporate Governance written by Theodor Baums and published by Walter de Gruyter. This book was released on 2011-05-02 with total page 725 pages. Available in PDF, EPUB and Kindle. Book excerpt: The volume contains 23 articles by international experts, both scholars and practioners dealing with the development of institutional investors (such as banks, insurances, investment companies, pension funds etc.), their investment and voting policies, the impact on managements of the companies concerned and related issues. The consequences of the international development on capital markets as well as policy implications for the respective national legislations are treated.

Institutional Trading and Corporate Performance

Author : Mark Lang
Publisher :
ISBN 13 :
Total Pages : 68 pages
Book Rating : 4.0/5 ( download)

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Book Synopsis Institutional Trading and Corporate Performance by : Mark Lang

Download or read book Institutional Trading and Corporate Performance written by Mark Lang and published by . This book was released on 1997 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Institutional Stakeholdings and Better-Informed Traders at Earnings Announcements

Author : Ashiq Ali
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Institutional Stakeholdings and Better-Informed Traders at Earnings Announcements by : Ashiq Ali

Download or read book Institutional Stakeholdings and Better-Informed Traders at Earnings Announcements written by Ashiq Ali and published by . This book was released on 2008 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Utama and Cready (1997) use total institutional ownership to proxy for the proportion of better-informed traders, an important determinant of trading around earnings announcements. We argue that institutions holding small stakes cannot justify the fixed cost of developing private predisclosure information. Also, institutions with large stakes generally do not trade around earnings announcements since they are dedicated investors or face regulations that make informed trading difficult. However, institutions holding medium stakes have incentives to develop private predisclosure information and trade on it; we show that their ownership is a finer proxy for the proportion of better-informed traders at earnings announcements.

Value Relevance of Accounting Information in Capital Markets

Author : Ojo, Marianne
Publisher : IGI Global
ISBN 13 : 1522519017
Total Pages : 334 pages
Book Rating : 4.5/5 (225 download)

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Book Synopsis Value Relevance of Accounting Information in Capital Markets by : Ojo, Marianne

Download or read book Value Relevance of Accounting Information in Capital Markets written by Ojo, Marianne and published by IGI Global. This book was released on 2016-12-12 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: Among banking industries and insurance and security sectors, systemic risk and information uncertainty can generate negative consequences. By developing solutions to address such issues, financial regulation initiatives can be optimized. Value Relevance of Accounting Information in Capital Markets is an essential reference source for the latest scholarly research on the importance of information asymmetries and uncertainties and their effects on the overall regulation of financial industries. Featuring extensive coverage on a wide range of perspectives, such as financial reporting standards, investor confidence, and capital flows, this publication is ideally designed for professionals, accountants, and academics seeking current research on the effects of the underlying elements in investing.

Entrepreneurship, Finance, Governance and Ethics

Author : Robert Cressy
Publisher : Springer Science & Business Media
ISBN 13 : 9400738676
Total Pages : 390 pages
Book Rating : 4.4/5 (7 download)

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Book Synopsis Entrepreneurship, Finance, Governance and Ethics by : Robert Cressy

Download or read book Entrepreneurship, Finance, Governance and Ethics written by Robert Cressy and published by Springer Science & Business Media. This book was released on 2012-11-07 with total page 390 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book covers topics that are at the intersection of business ethics and governance as they pertain to entrepreneurship and finance. It is the first focused work that links entrepreneurship and finance to governance and business ethics, rather than explore them separately. The chapters highlight with empirical data the strong interplay between ethics in organizational efficiency and financial activity, and the role of legal settings and governance in facilitating ethical standards. They discuss novel and timely topics, particularly given the recent financial crisis and discussions on regulating ethical behaviour. This book will encourage future scholars to investigate the role of law and governance in mitigating corruption and facilitating integrity in entrepreneurship and finance.

Grow the Pie

Author : Alex Edmans
Publisher : Cambridge University Press
ISBN 13 : 1009054678
Total Pages : 541 pages
Book Rating : 4.0/5 (9 download)

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Book Synopsis Grow the Pie by : Alex Edmans

Download or read book Grow the Pie written by Alex Edmans and published by Cambridge University Press. This book was released on 2021-11-11 with total page 541 pages. Available in PDF, EPUB and Kindle. Book excerpt: Companies can both serve society and create profit. This book shows how-based on rigorous evidence and an actionable framework.

Institutional Trading Motives and the Role of Brokers

Author : Munhee Han
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (119 download)

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Book Synopsis Institutional Trading Motives and the Role of Brokers by : Munhee Han

Download or read book Institutional Trading Motives and the Role of Brokers written by Munhee Han and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays in financial economics. Two essays are in the areas of institutional investors and market mircrostructure. The first essay, included in Chapter 2, studies order submission strategies by institutional investors when trading on private information. By merging institutional daily transactions with original/confidential 13F filings, I separate informed trades from uninformed ones. Informed large orders tend to be split across more brokers and over more days. While same brokers tend to work uninformed large orders over multiple days, the brokers who facilitated early parts of broken-up informed orders rarely receive the remaining parts of the same orders on later days. Institutional investors also provide camouflage for their informed orders by mixing an informed order with other uninformed orders simultaneously sent to the same broker. As a result, a higher degree of shuffling a portfolio of orders is associated with a larger share of informed trading volume. The splitting and shuffling strategies designed to conceal informed trades from brokers and other market participants tend to lower institutional trading costs, especially on informed orders. The second essay, included in Chapter 3 and co-authored with Sanghyun (Hugh) Kim and Vikram Nanda, investigates how institutional brokerage networks of mutual funds can affect their trading performance, especially as measured by the return gap. We argue that institutional brokerage networks facilitate liquidity provision and mitigate price impact of large non-information motivated trades. Using commission payments, we map trading networks of mutual funds and brokers. We find central funds outperform peripheral funds, especially as measured by return gap. The outperformance is more pronounced when trading is primarily liquidity-driven. The centrality premium is strengthened by brokers’ incentives to generate greater revenues and their repeated interactions with funds. By merging daily transactions with quarterly holdings, we confirm that centrality premium is driven by reduced trading costs, rather than higher interim (intra-quarter) trading performance or profitable information from brokers.

How Informed are Actively Trading Institutional Investors? Evidence from Their Trading Behavior Before a Break in a String of Consecutive Earnings Increases

Download How Informed are Actively Trading Institutional Investors? Evidence from Their Trading Behavior Before a Break in a String of Consecutive Earnings Increases PDF Online Free

Author : Bin Ke
Publisher :
ISBN 13 :
Total Pages : 45 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis How Informed are Actively Trading Institutional Investors? Evidence from Their Trading Behavior Before a Break in a String of Consecutive Earnings Increases by : Bin Ke

Download or read book How Informed are Actively Trading Institutional Investors? Evidence from Their Trading Behavior Before a Break in a String of Consecutive Earnings Increases written by Bin Ke and published by . This book was released on 2004 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Institutional investors are often assumed better informed but settings in which they are better informed or the sources of their advantage are not identified. We examine a setting that demonstrates institutional investors' information advantage and their source. We show that transient institutions (i.e., those trading actively to maximize short-term profits) predict breaks in strings of consecutive quarterly earnings increases at least one quarter prior to the break quarter. We also provide evidence that one source of their advantage is private communications with management. We find no evidence that other types of institutional investors predict breaks.

6th International Finance Conference on Financial Crisis and Governance

Author : Mondher Bellalah
Publisher : Cambridge Scholars Publishing
ISBN 13 : 1443833126
Total Pages : 880 pages
Book Rating : 4.4/5 (438 download)

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Book Synopsis 6th International Finance Conference on Financial Crisis and Governance by : Mondher Bellalah

Download or read book 6th International Finance Conference on Financial Crisis and Governance written by Mondher Bellalah and published by Cambridge Scholars Publishing. This book was released on 2011-08-08 with total page 880 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial markets, the banking system, and the real estate, commodity and energy markets have, since 2007, been experiencing higher integration, more volatility and have undergone several shocks. More coordination is needed between G20 and market authorities. Regulators, banking supervision agencies and politicians are worried about economic growth and financial crisis. This book covers seven aspects related to financial economic issues, along with some connected topics. The first covers risk assessment, corporate governance and value creation through an appropriate risk management system. The second covers international investments, market correlation, institutional holdings and market reactions during crisis. The third part is devoted to empirical and quantitative analysis of the observed economics and finance issues. The fourth part is devoted to the role of debt in financial crisis and its impact on financial markets and the world economy. The fifth part is devoted to debt policy, free cash flows and the structure of governance. The sixth part deals with management control and the importance of communication. The last part covers Islamic finance as an alternative to conventional finance for the debt solution, the importance of the energy sector and the role of financial innovations.

Do Foreign Institutional Traders Have Private Information for the Market Index?

Author : Pei-Shih Weng
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Do Foreign Institutional Traders Have Private Information for the Market Index? by : Pei-Shih Weng

Download or read book Do Foreign Institutional Traders Have Private Information for the Market Index? written by Pei-Shih Weng and published by . This book was released on 2017 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether foreign institutional investors possess private information in index futures trading based upon six-year market index futures transaction data on the Taiwan Futures Exchange (TAIFEX). According to the French and Roll (1986) 'decomposition of price formation', our empirical results rule out the possibility that volatility dynamics are driven by public information and mispricing, since the findings indicate that private information proxied by information-related intraday patterns of volatility and bid-ask spread would be the major cause of price variations. A test of the information hypothesis of Schlag and Stoll (2005) provides further support for the existence of private information in foreign institutional trading. Finally, when calculating the cumulative return for foreign institutional traders from detailed account-by-account trading data, the conclusions drawn from our empirical analysis remain unchanged.

Corporate Governance Strengthening Latin American Corporate Governance The Role of Institutional Investors

Author : OECD
Publisher : OECD Publishing
ISBN 13 : 9264116052
Total Pages : 78 pages
Book Rating : 4.2/5 (641 download)

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Book Synopsis Corporate Governance Strengthening Latin American Corporate Governance The Role of Institutional Investors by : OECD

Download or read book Corporate Governance Strengthening Latin American Corporate Governance The Role of Institutional Investors written by OECD and published by OECD Publishing. This book was released on 2011-07-01 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance.

Portfolio Preferences of Foreign Institutional Investors

Author : Reena Aggarwal
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 47 pages
Book Rating : 4./5 ( download)

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Book Synopsis Portfolio Preferences of Foreign Institutional Investors by : Reena Aggarwal

Download or read book Portfolio Preferences of Foreign Institutional Investors written by Reena Aggarwal and published by World Bank Publications. This book was released on 2003 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Corporate Payout Policy

Author : Harry DeAngelo
Publisher : Now Publishers Inc
ISBN 13 : 1601982046
Total Pages : 215 pages
Book Rating : 4.6/5 (19 download)

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Book Synopsis Corporate Payout Policy by : Harry DeAngelo

Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.

Effective Company Disclosure in the Digital Age

Author : Gill North
Publisher : Kluwer Law International B.V.
ISBN 13 : 9041168184
Total Pages : 386 pages
Book Rating : 4.0/5 (411 download)

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Book Synopsis Effective Company Disclosure in the Digital Age by : Gill North

Download or read book Effective Company Disclosure in the Digital Age written by Gill North and published by Kluwer Law International B.V.. This book was released on 2015-10-16 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt: Effective corporate reporting and disclosure are critical in financial markets to promote vigorous competition, optimal performance, and transparency. This book examines whether existing disclosure frameworks in eight countries with the world's most significant securities exchanges achieve these objectives, and then, drawing on extensive empirical findings, identifies the policies and practices that contribute most to improving the overall quality of listed company reporting and communication. Contending that public disclosure of listed company information is an essential precondition to the long-term efficient operation of financial markets, the book provides analysis of such issues and topics as the following: - arguments for and against mandatory disclosure regimes; - key principles of periodic and continuous disclosure regulation; - tensions between direct and indirect investment in financial markets; - assumptions concerning the need to maintain a privileged role for financial intermediaries; - intermediary, analyst, and research incentives; - protection of individual investors; - selective disclosure; - disclosure of bad news; - the role of accounting standards; - public access to company briefings; - long term performance reporting and analysis; and - company reporting developments. A significant portion of the book provides an overview of disclosure regulation and practice in the United States, Canada, Germany, the United Kingdom, Japan, Hong Kong, Australia, and Singapore. A highly informative survey looks at company reports, disclosures, and websites of large listed companies, including Microsoft, Citigroup, Teck Resources, Deutsche Bank, BP, Sony, PetroChina Company, BHP Billiton, and Singapore Telecommunications. The book discusses common disclosure issues that arise across jurisdictions, provides valuable insights on the efficacy of existing disclosure regulation and practice, and highlights the important principles, processes, and practices that underpin best practice company disclosure frameworks. It will be welcomed by company boards and executives and their counsel, as well as by policymakers and scholars in the areas of corporate, securities, banking and financial law, accounting, economics and finance.