Institutional ownership, differential predisclosure precision and trading volume at announcement dates

Institutional ownership, differential predisclosure precision and trading volume at announcement... This study examines the relation between ownership structure, as revealed by the percentage of outstanding shares held by institutional investors, and trading volume at earnings announcement dates. We find that volume response as a function of institutional ownership is quadratic with the quadratic curve that reaches a maximum at around 50% institutional ownership. When risk tolerances are identical across investor types such a relation is consistent with Kim and Verrecchia's (1991a) proposition that trading volume response to public announcements increases with the level of cross-investor variation in precision of private predisclosure information. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

Institutional ownership, differential predisclosure precision and trading volume at announcement dates

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Publisher
Elsevier
Copyright
Copyright © 1997 Elsevier Science B.V.
ISSN
0165-4101
DOI
10.1016/S0165-4101(98)00003-2
Publisher site
See Article on Publisher Site

Abstract

This study examines the relation between ownership structure, as revealed by the percentage of outstanding shares held by institutional investors, and trading volume at earnings announcement dates. We find that volume response as a function of institutional ownership is quadratic with the quadratic curve that reaches a maximum at around 50% institutional ownership. When risk tolerances are identical across investor types such a relation is consistent with Kim and Verrecchia's (1991a) proposition that trading volume response to public announcements increases with the level of cross-investor variation in precision of private predisclosure information.

Journal

Journal of Accounting and EconomicsElsevier

Published: Dec 15, 1997

References

  • A theory of trading volume
    Karpoff, J.M.

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