Do institutional investors have superior stock selection ability in China? |
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Authors: | Yihong Deng Yongxing Xu |
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Institution: | aThe School of Economics & Management, Tsinghua University, China;bThe Finance Department of Guangxi Zhuang Autonomous Region, China |
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Abstract: | This paper uses unique data on the shareholdings of both institutional and individual investors to directly investigate whether institutional investors have better stock selection ability than individual investors in China. Controlling for other factors, we find that institutional investors increase (decrease) their shareholdings in stocks that subsequently exhibit positive (negative) short- and long-term cumulative abnormal returns. In contrast, individual investors decrease (increase) their shareholdings in stocks that subsequently exhibit positive (negative) short- and long-term cumulative abnormal returns. These findings indicate that institutional investors have superior stock selection ability in China. |
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Keywords: | JEL classification: G14 G20 |
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