Institutional Ownership And Long Term Stock Returns

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Institutional Ownership And Long Term Stock Returns

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Author : Galina Ovtcharova
language : en
Publisher:
Release Date : 2003

Institutional Ownership And Long Term Stock Returns written by Galina Ovtcharova and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Stocks categories.

Institutional Ownership And Stock Price Crash Risk

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Author :
language : en
Publisher: GRIN Verlag
Release Date : 2024-07-19

Institutional Ownership And Stock Price Crash Risk written by and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-07-19 with Business & Economics categories.

Master's Thesis from the year 2024 in the subject Business economics - Investment and Finance, grade: 1,7, University of Hamburg, language: English, abstract: This study uses OLS regressions to analyze the impact of institutional ownership (IO) investment horizons on stock price synchronicity and crash risk for a sample of U.S. companies. Two main hypotheses are tested: (1) long-term (short-term) IO (LTIO) (STIO) are negatively (positively) related to stock price synchronicity, and (2) long-term (short-term) IO are negatively (positively) related stock price crash risk. Stock price synchronicity (SYNCH) measures how much firm-specific returns align with overall market returns, while crash risk (NCSKEW, DUVOL, COUNT) indicates the likelihood of a sudden, significant price drop. The theory posits that short-term investors, more prone to sell shares, provide weaker oversight, giving managers more freedom to influence cash flows and increasing synchronicity. In contrast, long-term investors establish stronger management relationships, reducing synchronicity through enhanced oversight. The findings reveal that both long-term and short-term IO positively impact synchronicity, contradicting the hypothesis for long-term IO. This aligns with literature suggesting institutional investors use superior information mainly for trading rather than management engagement. For crash risk, results support the agency theory: long-term IO is associated with reduced crash risk due to better monitoring, while short-term IO correlates with higher crash risk due to frequent trading and weaker oversight. These findings align with prior research, indicating that bad news is disclosed under long-term monitoring, causing abrupt price drops. During the 2008 financial crisis, average crash risk was significantly higher, especially for financial firms. The interaction between IO horizons and the crisis suggests complex dynamics needing further study, particularly the negative interaction of long-term and aggregated IO during recessions. Robustness checks, including firm fixed-effects regressions and variable changes, confirm primary findings but suggest cautious interpretation for long-term IO results. Limitations include a relatively short observation period (2000-2017), potential measurement biases in tax avoidance proxies (long-run cash effective tax rate (LRETR)), and unaddressed endogeneity concerns. Future research should explore evolving ownership structures, corporate social responsibility, and impacts of recent disruptions like the COVID-19 pandemic on crash risk.

Investor Heterogeneity And Negative Skewness In Stock Returns

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Author : Ramzi Benkraiem
language : en
Publisher:
Release Date : 2023

Investor Heterogeneity And Negative Skewness In Stock Returns written by Ramzi Benkraiem and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.

We examine the relation between the probability of future stock price crash and investors' investment horizons. Using negative skewness as a proxy for firm-specific crash risk, we document a positive association between institutional ownership and stock price crash risk. The relation is, however, driven by short-term institutional investors, while the presence of long-term institutional investors has a negative effect on stock price crash risk. In addition, we find that the presence of short-term institutional investors induces corporate risk-taking behavior. Our results are robust to alternative model specifications, endogeneity concerns, and different measures of crash risk and proxies of investors' horizons.

Institutional Ownership Tender Offers And Long Term Investments

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Author :
language : en
Publisher:
Release Date : 1985

Institutional Ownership Tender Offers And Long Term Investments written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1985 with Corporations categories.

Changes In Institutional Ownership And Subsequent Earnings Announcement Abnormal Returns

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Author : Ashiq Ali
language : en
Publisher:
Release Date : 2008

Changes In Institutional Ownership And Subsequent Earnings Announcement Abnormal Returns written by Ashiq Ali and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.

This study documents an association between changes in institutional ownership during a calendar quarter and abnormal returns at the time of subsequent announcements of quarterly earnings. The result is driven by the portfolio returns of the extreme deciles of changes in institutional ownership, suggesting that institutions trade based on information about future earnings, but that such trading is not widespread. We also find that the difference between earnings announcement returns of the extreme deciles of change in institutional ownership is much greater when change in institutional ownership of a stock is driven by relatively few institutions, measured using the skewness of the distribution of change in institutional ownership of the stock. This result suggests that when fewer differentially informed investors make disproportionately large purchases or sales of stocks, a greater amount of the information on which they base their trades is not impounded in prices until the subsequent earnings announcement. Finally, we show that our results obtain for institutional investors with short-term focus, such as independent advisors, investment companies and insurance companies, but not for institutional investors with long-term focus, such as internally managed pension funds, educational institutions, and private foundations. This result further supports our conclusions regarding informed trading by institutions based on information about forthcoming earnings.

Institutional Investors And Equity Returns

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Author : Xuemin (Sterling) Yan
language : en
Publisher:
Release Date : 2013

Institutional Investors And Equity Returns written by Xuemin (Sterling) Yan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.

We show that the positive relation between institutional ownership and future stock returns documented in Gompers and Metrick () is driven by short-term institutions. Furthermore, short-term institutions' trading forecasts future stock returns. This predictability does not reverse in the long run and is stronger for small and growth stocks. Short-term institutions' trading is also positively related to future earnings surprises. By contrast, long-term institutions' trading does not forecast future returns, nor is it related to future earnings news. Our results are consistent with the view that short-term institutions are better informed and they trade actively to exploit their informational advantage.

Corporate Payout Policy

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Author : Harry DeAngelo
language : en
Publisher: Now Publishers Inc
Release Date : 2009

Corporate Payout Policy written by Harry DeAngelo and has been published by Now Publishers Inc this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Corporations categories.

Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.

The Rise Of Fiduciary Capitalism

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Author : James P. Hawley
language : en
Publisher: University of Pennsylvania Press
Release Date : 2000-10-06

The Rise Of Fiduciary Capitalism written by James P. Hawley and has been published by University of Pennsylvania Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000-10-06 with Business & Economics categories.

Traces the rise of public and private pension funds, which now control as much as 50 percent of the equity in American corporations, and argues that shareholders in those funds could use their power to make corporations more responsive to social needs.

Institutional Ownership And The Extent To Which Stock Prices Reflect Future Earnings

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Author : James J. Jiambalvo
language : en
Publisher:
Release Date : 2001

Institutional Ownership And The Extent To Which Stock Prices Reflect Future Earnings written by James J. Jiambalvo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with categories.

Articles in the financial press suggest that institutional investors are overly focused on current profitability. This suggests that as institutional ownership increases, stock prices will reflect less current period information that is predictive of future period earnings. On the other hand, institutional investors are often characterized in academic research as sophisticated investors. Sophisticated investors should be better able to utilize current period information to predict future earnings compared to other owners. According to this characterization, as institutional ownership increases, stock prices should reflect more current period information that is predictive of future period earnings. Consistent with this latter view, we find that the extent to which stock prices lead earnings is positively related to the percentage of institutional ownership. This result holds after controlling for various factors that affect the relation between price and earnings. It also holds when we control for endogenous portfolio choices of institutions (e.g., institutional investors may be attracted to firms in richer information environments where stock prices tend to lead earnings). Further, a regression of stock returns on order backlog, conditional on the percentage of institutional ownership, indicates that institutional owners place more weight on order backlog compared to other owners. This is consistent with institutional owners using non-earnings information to predict future earnings. It also explains, in part, why prices lead earnings to a greater extent when there is a higher concentration of institutional owners.

Institutional Investors In Global Capital Markets

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Author : Narjess Boubakri
language : en
Publisher: Emerald Group Publishing
Release Date : 2011-09-27

Institutional Investors In Global Capital Markets written by Narjess Boubakri and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-09-27 with Business & Economics categories.

Examines various issues concerning the strategies of institutional investors, the role of institutional investors in corporate governance, their impact on local and international capital markets, as well as the emergence of sovereign and other asset management funds and their interactions with micro and macro economic and market environments.