Information advantages of large institutional owners

We study the relation between the percentage of outstanding shares held by a firm's largest institutional owner and the bid-ask spread on that firm's shares, a measure of information risk. We find that the greater the percentage of shares held by the largest institutional investor, the gre...

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Bibliographic Details
Published inStrategic management journal Vol. 29; no. 2; pp. 219 - 227
Main Authors Schnatterly, Karen, Shaw, Kenneth W., Jennings, William W.
Format Journal Article
LanguageEnglish
Published Chichester, UK John Wiley & Sons, Ltd 01.02.2008
John Wiley and Sons
Wiley Periodicals Inc
Subjects
Asked price
bid-ask spread
Business studies
Capital costs
Common stock
Financial information
Financial investments
Information
Institutional investments
institutional owners
Institutions
Investment risk
Investors
Large enterprises
Market prices
monitoring
Ownership and control
ownership concentration
Research Notes and Commentaries
Shares
Shares outstanding
Stock prices
Stock sales
Studies
Trade
U.S.A
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Summary:We study the relation between the percentage of outstanding shares held by a firm's largest institutional owner and the bid-ask spread on that firm's shares, a measure of information risk. We find that the greater the percentage of shares held by the largest institutional investor, the greater the bid-ask spread in share prices. In contrast, the percentage of shares held by smaller institutional owners is related to lower bid-ask spreads. The results imply that only the largest of a firm's institutional owners--and no other institutional owner--is perceived to hold an information advantage.
Bibliography:istex:C07D5B2708E49EFD1A546192AF0EBFCBCCD4DDB9
ArticleID:SMJ654
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ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 23
ObjectType-Article-2
ObjectType-Feature-1
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.654