How Informed Are Actively Trading Institutional Investors?

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CFA Digest
May 2005 | Vol. 35 | No. 2 | 3 pages
Source: CFA Institute
Bin Ke Kathy Petroni
Keith H. Black, CFA (Reviewer)

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Abstract

The authors present evidence that institutional investors who are the most frequent traders have information that allows them to sell stocks before the worst earnings disappointments. This trading behavior is not seen in institutional investors with longer holding periods. This information advantage may decline, however, if Regulation Fair Disclosure causes companies to provide more information to the public while reducing their selective disclosure to institutional investors.

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Topics
Corporate Finance
    :
  • Corporate Governance
|
Equity Investments
    :
  • Fundamental Analysis (Sector, Industry, Company) and the Valuation of Individual Equity Securities
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