Institutional Investors and Information Content of Earnings Announcements Over Time

35 Pages Posted: 21 Oct 2011  

G. Mujtaba Mian

Zayed University; Hong Kong Polytechnic University

Suresh Radhakrishnan

University of Texas at Dallas - School of Management

Lixin (Nancy) Su

Department of Accountancy, Lingnan University

Date Written: 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.

Keywords: Information Content of Earnings Announcements, Institutional Investors, Concurrent Disclosure

Suggested Citation

Mian, G. Mujtaba and Radhakrishnan , Suresh and Su, Lixin (Nancy), Institutional Investors and Information Content of Earnings Announcements Over Time (October 19, 2011). Available at SSRN: https://ssrn.com/abstract=1946605 or http://dx.doi.org/10.2139/ssrn.1946605

G. Mujtaba Mian

Zayed University

P.O. Box 19282
College of Business
Dubai, Dubai 19282
United Arab Emirates
+971568120604 (Phone)

Hong Kong Polytechnic University ( email )

Suresh Radhakrishnan (Contact Author)

University of Texas at Dallas - School of Management ( email )

2601 North Floyd Road
Richardson, TX 75083-0688
United States
972-883-4438 (Phone)
972-883-6811 (Fax)

Lixin (Nancy) Su

Department of Accountancy, Lingnan University ( email )

8 Castle Peak Road
Lingnan University
Tuen Mun, New Territories
Hong Kong

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