HCBE Faculty Articles
Who Reacts to News?
ORCID
Kershen Huang 0000-0002-7141-3668
Document Type
Article
Publication Title
Quarterly Journal of Finance
ISSN
2010-1392
Publication Date
2019
Abstract/Excerpt
We show that the positive relation between firm-level cash-flow news and institutional ownership documented by [Cohen et al., Journal of Financial Economics 66, 409–462.] is mostly driven by short-horizon investors. Short-term institutions trade to incorporate cash-flow related information into prices and potentially reduce under-reaction to cash-flow news. In contrast, long-term institutions are more sensitive to discount-rate news, consistent with the idea that their strategy is to realize the long-term expected returns and that they care more about changes in their opportunity set. Our results support the premise that short- and long-horizon institutions are potentially trading with each other based on their opposing preferences for news.
DOI
https://doi.org/10.1142/S2010139219400020
Volume
9
Issue
1
NSUWorks Citation
Chichernea, Doina; Gilstrap, Collin; Huang, Kershen; and Petkevich, Alex, "Who Reacts to News?" (2019). HCBE Faculty Articles. 1030.
https://nsuworks.nova.edu/hcbe_facarticles/1030
