Institutional stakeholdings and better-informed traders at earnings announcements

Ashiq Ali, Sandy Klasa and Oliver Zhen Li

Journal of Accounting and Economics, 2008, vol. 46, issue 1, pages 47-61

Abstract: Utama and Cready [Utama, S., Cready, W.M., 1997. Institutional ownership, differential predisclosure precision and trading volume at announcement dates. Journal of Accounting and Economics 24, 129-150] 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.

Keywords: Better-informed; traders; Institutional; stakeholding; Institutional; ownership; Differential; precision; of; private; predisclosure; information; Trading; volume; at; earnings; announcements (search for similar items in EconPapers)
Date: 2008

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6V87 ... 796ec27ad1a42f0418b6
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jaecon:v:46:y:2008:i:1:p:47-61

Access Statistics for this article

Journal of Accounting and Economics is edited by J. L. Zimmerman, S. P. Kothari, T. Z. Lys and R. L. Watts

More articles in Journal of Accounting and Economics from Elsevier
Series data maintained by Heidi Boesdal ().