JavaScript is disabled for your browser. Some features of this site may not work without it.
Accounting Earnings Announcements, Institutional Investor Concentration, and Common Stock Returns

Author
Potter, Gordon S.
Abstract
[Excerpt] This study examines the relation between the level of institutional investor ownership and the magnitude of security price variability at quarterly earnings announcement dates. Prior research consistently documents a negative association between firm size and announcement-date return variability. One explanation for this finding is that as more timely, alternative information becomes available on large firms prior to an announcement date, their security prices become informative, thereby reducing the information content of the earnings announcement. Large firms are closely followed by institutional investors. These investors dedicate substantial resources to information search. Therefore, the link between size and information production may be attributable to the influence of institutional investors on the information production process. Because institutional trades can also affect security prices, however, the precise impact of institutional following on the variability of prices at quarterly earnings dates is not evident.
Date Issued
1992-01-01Subject
security price variability; stock prices; institutional ownership
Related DOI:
https://doi.org/10.2307/2491097Rights
Required Publisher Statement: © Wiley. Final version published as: Potter, G. (1992). Accounting earnings announcements, institutional investor concentration, and common stock returns. Journal of Accounting Research, 30(1), 146-155. Reprinted with permission. All rights reserved.
Type
article