Institutional Counterparties and Performance

44 Pages Posted: 15 May 2018

See all articles by Ozgur Ince

Ozgur Ince

University of South Carolina - Moore School of Business

Gregory B. Kadlec

Virginia Polytechnic Institute & State University - Pamplin College of Business

Stephen B. McKeon

University of Oregon - Department of Finance

Date Written: May 2, 2018

Abstract

We examine the counterparties to institutional trades and their relation to institutional trade performance over time. We find that institutional trade performance has declined since 1980, but the reasons go far beyond the shrinking pool of retail investors as counterparties. Our evidence suggests that a primary factor in the decline in institutional performance is their loss of privileged access to information (Reg FD). Another key factor is their declining performance in transactions with firms (i.e., equity offerings and repurchases), an important counterparty that is typically overlooked in studies of institutional trading. Institutions with passive strategies appear to be especially vulnerable to underperforming trades with firms.

Keywords: Institutional Investors, Counterparties, Individual Investors, Performance, Reg FD

JEL Classification: G23, G14

Suggested Citation

Ince, Ozgur S. and Kadlec, Gregory B. and McKeon, Stephen B., Institutional Counterparties and Performance (May 2, 2018). Available at SSRN: https://ssrn.com/abstract=3172301 or http://dx.doi.org/10.2139/ssrn.3172301

Ozgur S. Ince (Contact Author)

University of South Carolina - Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States
(803) 777-4905 (Phone)

Gregory B. Kadlec

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States
540-231-4316 (Phone)

Stephen B. McKeon

University of Oregon - Department of Finance ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
59
Abstract Views
352
rank
359,833
PlumX Metrics