Who trades in competing firms around earnings announcements

Priyantha Mudalige, Huu Nhan Duong, Petko S. Kalev and Kartick Gupta

Pacific-Basin Finance Journal, 2020, vol. 59, issue C

Abstract: This study investigates individual and institutional trading activities around earnings announcements. We find evidence of individual and institutional informed trading in competing firms before earnings announcements. We also observe that institutional trading exhibits quicker incorporation of new information, which suggests that institutional investors are more likely to use private information in trading in competing firms. The individual net order flow transmits information cross-stock when a competitor is a small firm, while institutional net order flow conveys information cross-stock irrespective of firm size. Finally, we find that institutional trading in competing firms exhibits cross-stock price impact before earnings announcements.

Keywords: Earning announcements; Institutional and individual investors; Competing firms; Informed trading; Cross-stock price impact (search for similar items in EconPapers)
JEL-codes: G11 G12 G14 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:59:y:2020:i:c:s0927538x1830581x

DOI: 10.1016/j.pacfin.2019.101219

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