Information Advantages of Large Institutional Owners
Strategic Management Journal, Vol. 29, pp. 219-227, 2008
9 Pages Posted: 5 Feb 2008
Abstract
We study the relation between the percentage of outstanding shares held by a firm's largest institutional owner and the bid-ask spread on that firm's shares, a measure of information risk. We find that the greater the percentage of shares held by the largest institutional investor, the greater the bid-ask spread in share prices. In contrast, the percentage of shares held by smaller institutional owners is related to lower bid-ask spreads. The results imply that only the largest of a firm's institutional owners - and no other institutional owner - is perceived to hold an information advantage.
Keywords: institutional owners, monitoring, ownership concentration, information, bid-ask spread
JEL Classification: G12, G14, G2
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Corporate Governance and Shareholder Initiatives: Empirical Evidence
By Jonathan M. Karpoff, Paul H. Malatesta, ...
-
The Impact of Shareholder Activism on Target Companies: A Survey of Empirical Findings
-
Shareholder Activism and Corporate Governance in the United States
-
Monitoring: Which Institutions Matter?
By Kai Li, Jarrad Harford, ...
-
Hedge Fund Activism, Corporate Governance, and Firm Performance
-
By Tim C. Opler and Jonathan S. Sokobin
-
The Evolution of Shareholder Activism in the United States
By Stuart Gillan and Laura T. Starks