The Effect of Investment Horizon on Institutional Investors' Incentives to Acquire Private Information on Long-Term Earnings*

54 Pages Posted: 7 Mar 2005

See all articles by Bin Ke

Bin Ke

National University of Singapore

Santhosh Ramalingegowda

University of Georgia - Terry College of Business

Yong Yu

University of Texas at Austin

Date Written: July 27, 2006

Abstract

We use quarterly institutional ownership changes to test the effect of investment horizon on institutional investors' incentives to acquire private information on long term earnings. Short horizon institutions' ownership changes contain private information on long term earnings, but only to the extent that such private information will be reflected in near term stock prices. There is little evidence that long horizon institutions' ownership changes contain private information on long term earnings that will be revealed in near term stock prices, but long horizon institutions' ownership changes contain private information on long term earnings that will be reflected in longer term stock prices.

Suggested Citation

Ke, Bin and Ramalingegowda, Santhosh and Yu, Yong, The Effect of Investment Horizon on Institutional Investors' Incentives to Acquire Private Information on Long-Term Earnings* (July 27, 2006). Available at SSRN: https://ssrn.com/abstract=673881 or http://dx.doi.org/10.2139/ssrn.673881

Bin Ke

National University of Singapore ( email )

Mochtar Riady Building, BIZ 1, #07-53
15 Kent Ridge Drive
Singapore, 119245
Singapore
+6566013133 (Phone)

Santhosh Ramalingegowda (Contact Author)

University of Georgia - Terry College of Business ( email )

Brooks Hall
Athens, GA 30602-6254
United States
706-542-3612 (Phone)

Yong Yu

University of Texas at Austin ( email )

1 University Station B6400
Austin, TX 78712
United States
(512)471-6714 (Phone)
(512)471-3904 (Fax)

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