Institutional investors and the information content of earnings announcements: the case of Poland

This paper investigates the relationship between market reaction to earnings surprises and institutional concentration in the firm’s shareholders base. We use data from the Polish stock market where pension funds form a homogenous and highly competitive investor class with an increasing share in the...

Full description

Saved in:
Bibliographic Details
Published in:Economic systems 2004-06, Vol.28 (2), p.193-208
Main Authors: Korczak, Piotr, Tavakkol, Amir
Format: Article
Language:English
Subjects:
Information advantage
Institutional investors
Public disclosure
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper investigates the relationship between market reaction to earnings surprises and institutional concentration in the firm’s shareholders base. We use data from the Polish stock market where pension funds form a homogenous and highly competitive investor class with an increasing share in the market capitalization and trading volume. We find evidence that higher pension funds’ holding in a company tends to reduce the magnitude of market reaction around public disclosures. We interpret these findings as an information advantage that funds have over individual investors, which may result from scale economies in gathering and processing public information, or access to privileged information in the interim period. We also find that company mangers are selective as to the type of information they provide to the market prior to their scheduled disclosures.
ISSN:0939-3625
1878-5433
DOI:10.1016/j.ecosys.2004.06.002