Short-Term Institutional Investors and the Diffusion of Supply Chain Information

49 Pages Posted: 12 Nov 2018 Last revised: 25 Mar 2024

See all articles by Rui Duan

Rui Duan

WU Vienna University of Economics and Business

Yelena Larkin

York University - Schulich School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 24, 2019

Abstract

Do short-term investors have informational advantage? This paper demonstrates the superior abilities of short-term institutional investors in processing complex publicly disclosed information. To do so, we exploit information flow along customer-supplier links and argue that short-term investors can benefit from the ability to process public, but slowly diffusing, supply chain information ahead of other market participants. In support of this argument, we find that short-term investors establish larger long and short positions in firms with high customer concentration. The link between customer concentration and short-term institutional ownership is stronger in the environment of high information asymmetry, further consistent with information advantage channel. Finally, we do not find preference towards high customer concentration firms among long-term institutions, who are less positioned to exploit short-lived information benefits.

Keywords: customer concentration, institutional investors, investor horizons, information, liquidity

JEL Classification: G11, G14, G23

Suggested Citation

Duan, Rui and Larkin, Yelena, Short-Term Institutional Investors and the Diffusion of Supply Chain Information (January 24, 2019). Available at SSRN: https://ssrn.com/abstract=3277201 or http://dx.doi.org/10.2139/ssrn.3277201

Rui Duan

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1, Building D1, 3rd Floor
Vienna, 1020
Austria

Yelena Larkin (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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