Accruals quality, information risk, and institutional investors’ trading behavior: Evidence from the Korean stock market

Kyung Soon Kim, Chune Young Chung, Jin Hwon Lee and Sangjun Cho

The North American Journal of Economics and Finance, 2020, vol. 51, issue C

Abstract: This study analyzes the effect of firm-specific information risk, measured by accruals quality, on the cost of capital using institutional investors’ trading behavior. Institutional investors in firms with lower accruals quality increase their net selling in later years. Furthermore, these investors’ net selling is relevant to the innate and discretionary factors of accruals quality. This relationship is stronger for foreign institutions than for domestic institutions, and it is mostly observed under favorable macroeconomic conditions. We do not observe this relationship for large business groups connected by shares.

Keywords: Accruals quality; Institutional investors’ trading behavior; Institution type; Macroeconomic condition; Business diversification (search for similar items in EconPapers)
JEL-codes: G12 G14 G34 M41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:51:y:2020:i:c:s1062940819300567

DOI: 10.1016/j.najef.2019.101081

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