The Interdependence between Institutional Ownership and Information Dissemination by Data Aggregators

Posted: 12 Sep 2007 Last revised: 7 Jul 2009

See all articles by Julia D'Souza

Julia D'Souza

Cornell University - Department of Accounting

K. Ramesh

Rice University

Min Shen

City University of New York - Stan Ross Department of Accountancy

Date Written: July 8, 2009

Abstract

This study examines the interdependence between institutional ownership and the speed with which Standard & Poor’s disseminates corporate accounting information. From the demand-side perspective, we find that quasi-indexers, who rely on corporate accounting information as a low-cost monitoring system, are the key driver of the institutional demand for speedy information dissemination. In addition, dissemination speed increases substantially for stocks listed in major market indices but decreases with high arbitrage risk or transaction costs. From the consequences perspective, we find that both transient investors and quasi-indexers gravitate to stocks with faster information dissemination, consistent with the latter using accounting information as a low-cost performance monitoring mechanism, and the former being better enabled to implement their trading strategies in a richer information environment. Overall, this study provides new insights into the capital market information infrastructure by examining how information intermediaries and sophisticated investors impact each others’ resource allocation decisions.

Keywords: institutional investors, data aggregators, information dissemination, capital markets

JEL Classification: D80, D83, G11, M41

Suggested Citation

D'Souza, Julia M. and Ramesh, K. and Shen, Min, The Interdependence between Institutional Ownership and Information Dissemination by Data Aggregators (July 8, 2009). AAA 2008 Financial Accounting and Reporting Section (FARS) Paper; Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1010834

Julia M. D'Souza

Cornell University - Department of Accounting ( email )

Ithaca, NY 14853
United States
607-255-2349 (Phone)
607-254-4590 (Fax)

K. Ramesh

Rice University ( email )

236 McNair Hall
Jones Graduate School of Business
Houston, TX 77005
United States
713.348.5380 (Phone)
713.348.6296 (Fax)

Min Shen (Contact Author)

City University of New York - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
646-312-3230 (Phone)

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