The Impact of Institutional Ownership on the Extent to Which Stock Prices Reflect Future Earnings

摘要

This paper empirically examines the impact of institutional ownership on the extent to which stock prices reflect future earnings of listed companies in China from 2004 to 2009. It hypotheses the stock prices reflect future earnings earlier for firms with high institutional holdings than for other firms. The results find that the extent to which stock prices reflect future earnings is positively related to the percentage of institutional ownership. That is, institutional ownership accelerates the pricing of future earnings,which indicates they take account of the listed companies' future information in China when institutional investors make decisions.