Who Reacts to News?

Event Location / Date(s)

Southwest Finance Association 2018 MeetingAlburquerque, NM

Event Name / Location

Southwest Finance Association 2018 Meeting

Presentation Date

2018

Document Type

Conference Presentation

Presenter(s) / Author(s)

Doina Chichernea, University of Denver
Collin Gilstrap, University of Toledo
Kershen Huang, Nova Southeastern UniversityFollow
Alex Petkevich, University of Toledo

ORCID ID

Kershen Huang0000-0002-7141-3668

Description

We examine the trading behavior of institutional investors in response to cash flow and discount rate news, conditional on their investment horizon. We find that shortterm institutions have a preference for trading around cash flow news, while long-term institutions prefer trading around discount rate news. We also find that short-term institutions sell on discount rate news, while long-term institutions buy on discount rate news. These news preferences are consistent with theories regarding the differing roles that short and long horizon institutions play in capital markets. Further, we find a positive relationship between firm size and institutional reaction to both types of news. We also show that the historic broad market return under-reaction to cash flow news has been primarily relegated to the negative cash flow news of small firms.

First Page

1

Last Page

45

Comments

Citation details to be verified.

NSUWorks Citation

Chichernea, Doina; Gilstrap, Collin; Huang, Kershen; and Petkevich, Alex, "Who Reacts to News?" (2018). HCBE Faculty Presentations. 1370.
https://nsuworks.nova.edu/hcbe_facpres/1370