Institutional Ownership and Market Risk Disclosures

• In Event: R & D, Ownership Disclosure & Social Responsibility

Abstract

This paper investigates the relationship between institutional ownership and market risk disclosures exploiting textual analysis data. We show that higher institutional ownership is positively associated with the readability and the similarity of Item 7A. In particular, we use residual institutional ownership to mitigate endogeneity concerns and show that there exists a positive relationship between the readability and short-term independent institutional ownership, and higher long-term independent institutional ownership firms produce similar market risk disclosures over time. Our findings suggest that certain types of institutional investors demand more readable and more consistent market risk disclosures, and institutions have different preferences for information content.

Authors

• Tianqi Jiang, Florida Atlantic University

• Xin Luo, Florida Atlantic University - Boca

• Zhao Wang, University of Rhode Island

• Fan Zhang, Arizona State University