Abstract
In this paper, we consider the trading behavior of institutional investors and short sellers around earnings announcements. The results suggest that institutional investors, and to a lesser extent short sellers, successfully anticipate earnings news. In the period immediately after the earnings announcement, both types of traders are active in the market and trade in response to the earnings announcement. In particular, short sellers are quick to increase their short positions when a company releases bad news. Institutional traders also trade in response to the news; however, they take longer to react.
| Original language | English |
|---|---|
| Pages (from-to) | 91-113 |
| Number of pages | 23 |
| Journal | The Financial Review |
| Volume | 47 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Feb 2012 |
Keywords
- Earnings announcements
- Informed traders
- Institutional ownership
- Post-earnings announcement drift
- Short selling
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