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Institutional Investors and Information Content of Earnings Announcements Over TimeG. Mujtaba MianHong Kong Polytechnic University Suresh RadhakrishnanUniversity of Texas at Dallas - School of Management Lixin (Nancy) SuHong Kong Polytechnic University - School of Accounting and Finance October 19, 2011 Abstract: The investor composition in the US stock market has been undergoing a dramatic shift towards greater institutional ownership. In this paper, we show that the increase in the stock ownership by institutions over time, especially those with focus on short-term performance, is positively related to the increase over time in stock market response to earnings announcements. Our findings offer an additional explanation to the increase over time in the information content of earnings announcements, and provide a rationale for the frequently expressed view by corporate managers that they are increasingly pressured to meet short-term earnings targets due to the fixation of their investors on near-term corporate performance.
Number of Pages in PDF File: 35 Keywords: Information Content of Earnings Announcements, Institutional Investors, Concurrent Disclosure working papers seriesDate posted: October 21, 2011Suggested CitationContact Information
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