Institutional Investors Heterogeneity, Future Earnings and the Informativeness of Stock Prices

2013 ◽  
Author(s):  
Ding Fangfei ◽  
Hou Ningning ◽  
Li Su
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Future Earnings

The Influence of Analysts, Institutional Investors, and Insiders on the Incorporation of Market, Industry, and Firm-Specific Information into Stock Prices

2004 ◽  
Vol 79 (4) ◽  
pp. 1119-1151 ◽  
Author(s):  
Joseph D. Piotroski ◽  
Darren T. Roulstone
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Stock Return ◽  
Relevant Information ◽  
Specific Information ◽  
Specific Component ◽  
Future Earnings ◽  
Industry Level ◽  
Level Information ◽  
Information Advantage

We investigate the extent to which the trading and trade-generating activities of three informed market participants—financial analysts, institutional investors, and insiders—influence the relative amount of firm-specific, industry-level, and market-level information impounded into stock prices, as measured by stock return synchronicity. We find that stock return synchronicity is positively associated with analyst forecasting activities, consistent with analysts increasing the amount of industry-level information in prices through intra-industry information transfers. In contrast, stock return synchronicity is inversely related to insider trades, consistent with these transactions conveying firm-specific information. Supplemental tests show that insider and institutional trading accelerate the incorporation of the firm-specific component of future earnings news into prices alone, while analyst forecasting activity accelerates both the industry and firm-specific component of future earnings news. Our results suggest that all three parties influence the firm's information environment, but the type of price-relevant information conveyed by their activities depends on each party's relative information advantage.

How Moroccan institutional investors view dividend policy

2017 ◽  
Vol 43 (12) ◽  
pp. 1332-1347 ◽  
Author(s):  
H. Kent Baker ◽  
Imad Jabbouri
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Mail Survey ◽  
High Response Rate ◽  
Content Type ◽  
Listed Firms ◽  
Dividend Policies ◽  
Dividend Payments

Purpose The purpose of this paper is to examine how Moroccan institutional investors view dividend policy. It discusses the importance these investors attach to the dividend policy of their investee firms, how much influence they exercise in shaping investee firms’ dividend policies, their reactions to changes in dividends, and their views on various explanations for paying dividends. Design/methodology/approach A mail survey provides a respondent and firm profile and responses to 28 questions involving various explanations for paying dividends and 30 questions on different dividend issues. Findings Institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Although liquidity needs are a major driver, taxes play little role in shaping dividend preferences. Respondents agree with multiple explanations for paying dividends giving the strongest support to catering, bird-in-the-hand, life cycle, signaling, and agency theories. Research limitations/implications Despite a high response rate, the number of respondents limits partitioning the sample and testing for significant differences between different groups. Practical implications The lack of communication between Casablanca Stock Exchange (CSE) listed firms and institutional investors may depress stock prices and increase volatility. The results suggest agency problems and a weak governance environment at the CSE. Originality/value This study documents the importance that institutional investors place on dividend policy, their reactions to changes in their investees’ dividend policy, and the methods used to influence these firms. It extends previous research by reporting the level of support Moroccan institutional investors give to various explanations for paying dividends.

Dividend Changes as Predictors of Future Profitability

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Fakhrul Hasan
Keyword(s):  
Information Content ◽  
Stock Prices ◽  
Special Interest ◽  
Dividend Policy ◽  
Future Earnings ◽  
New Information ◽  
Dividend Increases ◽  
Using Data ◽  
The Uk ◽  
Dividend Tax

This study investigates “the information content of dividends hypothesis” using data on UK firms from 1990-2015. Dividends act as an important conveyor of information. Dividend changes may trigger changes in stock prices because they may convey new information about the firm’s future earnings and profitability. Why do companies pay dividends (or analogously why are stockholders interested in receiving dividends), given that it is well known that dividends are often taxed heavily? This question is of special interest in the UK, where the dividend tax is higher than the capital gain tax. Previous research has used a number of dividend policy theories to explain the dividend policy puzzle. We carry out several estimations and find out that contrary to some other studies, there is no evidence that dividend increases (decreases) provide information about the future profitability or earnings of UK firms.

Short Sellers and the Informativeness of Stock Prices with Respect to Future Earnings

2012 ◽  
Author(s):  
Michael S. Drake ◽  
James N. Myers ◽  
Linda A. Myers ◽  
Michael D. Stuart
Keyword(s):  
Stock Prices ◽  
Future Earnings ◽  
Short Sellers

The Persistence, Forecasting, and Valuation Implications of the Tax Change Component of Earnings

2006 ◽  
Vol 81 (3) ◽  
pp. 589-616 ◽  
Author(s):  
Andrew P. Schmidt
Keyword(s):  
Stock Prices ◽  
Tax Rates ◽  
Effective Tax Rates ◽  
Future Earnings ◽  
Reporting Requirements ◽  
Prior Literature ◽  
Change Components

I examine whether earnings generated by changes in effective tax rates (the tax change component) persist and aid in forecasting future earnings. In addition, this study investigates to what extent investors incorporate the forecasting implications of the tax change component of earnings into stock prices. I find that there is a positive, significant association between the tax change component of earnings and future earnings. I use the interim reporting requirements of APB No. 28 (APB 1973) and FASB Interpretation No. 18 (FASB 1977) to further decompose the tax change component into an initial and a revised portion based on the first quarter estimate of the annual effective tax rates (ETR). I find that the initial tax change component is more persistent for future earnings than the revised tax change component. These results are consistent with my hypotheses that the initial and revised tax change components have differential persistence and forecasting implications, and dispute the broad notion advanced by prior literature that ETR-related earnings changes are transitory. Results from market tests indicate that the market underweights the forecasting implications of the tax change component and the mispricing appears to be driven by the transitory nature of the revised tax change component.

scholarly journals Herding Behavior of Institutional Investors in Romania. An Empirical Analysis

2017 ◽  
Vol 10 (2) ◽  
pp. 115-130
Author(s):  
Mihaela Brodocianu ◽  
Ovidiu Stoica
Keyword(s):  
Insider Trading ◽  
Institutional Investors ◽  
Stock Prices ◽  
Stock Exchange ◽  
Listed Company ◽  
Emerging Market ◽  
Herding Behavior ◽  
Stock Return Volatility ◽  
Emerging Stock Markets ◽  
The Status

AbstractDuring the last decades, institutional investors have been the main players, both in developed as well as in emerging stock markets. Thus, their investment behavior was analyzed at the national or international level, in order to assess if institutional investors herd, increase stock return volatility, affect market efficiency and liquidity, influence the corporate governance, or destabilize stock prices. This paper studies the behavior of the institutional investors on the Romanian stock market, a European frontier market that struggles to attain the status of emerging market. We examine if the disclosure level generates any herding behavior for institutional investors. In emerging markets, the lack of transparency affects the degree of investments in a listed company, as long as insider trading is pushed to the limit of the legal line. For this study, we used financial information from the companies listed on the Bucharest Stock Exchange for the period 2010-2014. The findings highlight that there is a certain herding behavior among institutional investors in Romania.

Sign in / Sign up

Export Citation Format

Share Document