Institutional Investor Attention and Firm Disclosure

57 Pages Posted: 8 Nov 2017 Last revised: 4 Sep 2019

See all articles by Inna Abramova

Inna Abramova

Massachusetts Institute of Technology (MIT) - Sloan School of Management

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Andrew Sutherland

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: August 3, 2019

Abstract

We study how short-term changes in institutional owner attention affect managers’ disclosure choices. Holding institutional ownership constant and controlling for industry-quarter effects, we find that managers respond to attention by increasing the number of forecasts and 8-K filings. Rather than alter the decision of whether to forecast or to provide more informative disclosures, attention causes minor disclosure adjustments. This variation in disclosure is primarily driven by passive investors. Although attention explains significant variation in the quantity of disclosure, we find little change in abnormal volume and volatility, the bid-ask spread, or depth. Overall, our evidence suggests that management responds to temporary institutional investor attention by making disclosures that have little effect on information quality or liquidity.

Keywords: disclosure, management forecasts, liquidity, institutional ownership, passive investors, corporate governance, monitoring

JEL Classification: G23, G32, G34, G12, G14

Suggested Citation

Abramova, Inna and Core, John E. and Sutherland, Andrew, Institutional Investor Attention and Firm Disclosure (August 3, 2019). 29th Annual Conference on Financial Economics & Accounting 2018. Available at SSRN: https://ssrn.com/abstract=3066136 or http://dx.doi.org/10.2139/ssrn.3066136

Inna Abramova

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave. E62-663
Cambridge, MA 02142
United States

John E. Core

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02138
United States

Andrew Sutherland (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street

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