The Performance of Institutional Investor Trades Across the Supply Chain

47 Pages Posted: 3 Apr 2016

See all articles by Dallin Alldredge

Dallin Alldredge

Florida International University

Andy Puckett

University of Tennessee, Knoxville

Date Written: April 1, 2016

Abstract

In this study, we investigate the significance of supply-chain relationships for institutional investors. We find that supply-chain relationships are an important determinant of institutional ownership – an institution that owns a customer firm is five times more likely than other institutions to also have an ownership stake in the firm’s supplier. Further, institutions experience abnormal trading profits in supplier firms. Trading profits are concentrated in small suppliers with negative future abnormal performance, consistent with institutional investors trading on negative information shocks across the supply chain. Robustness tests help to support a conclusion that supply-chain relationships provide a rich source of information through which institutions realize abnormal trading profits.

Keywords: institutional trading, informed trading, supply chain

JEL Classification: G12, G14, G20

Suggested Citation

Alldredge, Dallin and Puckett, Andy, The Performance of Institutional Investor Trades Across the Supply Chain (April 1, 2016). Available at SSRN: https://ssrn.com/abstract=2757735 or http://dx.doi.org/10.2139/ssrn.2757735

Dallin Alldredge (Contact Author)

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Andy Puckett

University of Tennessee, Knoxville ( email )

437 Stokely Managment Center
Knoxville, TN 37996
United States

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