Institutional Investors and the Informational Efficiency of Prices (2024)

Article Navigation

Volume 22 Issue 9 September 2009
  • < Previous
  • Next >

Journal Article

Get access

,

Ekkehart Boehmer

Lundquist College of Business, University of Oregon and Mays Business School, Texas A&M University

Send correspondence to Ekkehart Boehmer, Mays Business School, Texas A&M University, College Station, TX 77843-4218; telephone: 979-845-1224; Fax:

979-845-3884

. E-mail: eboehmer@mays.tamu.edu.

Search for other works by this author on:

Oxford Academic

Eric K. Kelley

Eller College of Management, University of Arizona

Search for other works by this author on:

Oxford Academic

The Review of Financial Studies, Volume 22, Issue 9, September 2009, Pages 3563–3594, https://doi.org/10.1093/rfs/hhp028

Published:

17 April 2009

  • Views
    • Article contents
    • Figures & tables
    • Video
    • Audio
    • Supplementary Data
  • Cite

    Cite

    Ekkehart Boehmer, Eric K. Kelley, Institutional Investors and the Informational Efficiency of Prices, The Review of Financial Studies, Volume 22, Issue 9, September 2009, Pages 3563–3594, https://doi.org/10.1093/rfs/hhp028

    Close

Search

Close

Search

Advanced Search

Search Menu

Abstract

Using a broad panel of NYSE-listed stocks between 1983 and 2004, we study the relation between institutional shareholdings and the relative informational efficiency of prices, measured as deviations from a random walk. Stocks with greater institutional ownership are priced more efficiently, and we show that variation in liquidity does not drive this result. One mechanism through which prices become more efficient is institutional trading activity, even when institutions trade passively. But efficiency is also directly related to institutional holdings, even after controlling for institutional trading, analyst coverage, short selling, variation in liquidity, and firm characteristics.

© Oxford University Press 2009

JEL

G12 - Asset Pricing; Trading volume; Bond Interest Rates G14 - Information and Market Efficiency; Event Studies; Insider Trading

Issue Section:

Article

You do not currently have access to this article.

Download all slides

Sign in

Get help with access

Personal account

  • Sign in with email/username & password
  • Get email alerts
  • Save searches
  • Purchase content
  • Activate your purchase/trial code

Sign in Register

Institutional access

  1. Sign in through your institution Institutional Investors and the Informational Efficiency of Prices (3)
  2. Sign in with a library card Sign in with username/password Recommend to your librarian

Institutional account management

Sign in as administrator

Get help with access

Institutional access

Access to content on Oxford Academic is often provided through institutional subscriptions and purchases. If you are a member of an institution with an active account, you may be able to access content in one of the following ways:

IP based access

Typically, access is provided across an institutional network to a range of IP addresses. This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account.

Sign in through your institution

Choose this option to get remote access when outside your institution. Shibboleth/Open Athens technology is used to provide single sign-on between your institution’s website and Oxford Academic.

  1. Click Sign in through your institution.
  2. Select your institution from the list provided, which will take you to your institution's website to sign in.
  3. When on the institution site, please use the credentials provided by your institution. Do not use an Oxford Academic personal account.
  4. Following successful sign in, you will be returned to Oxford Academic.

If your institution is not listed or you cannot sign in to your institution’s website, please contact your librarian or administrator.

Sign in with a library card

Enter your library card number to sign in. If you cannot sign in, please contact your librarian.

Society Members

Society member access to a journal is achieved in one of the following ways:

Sign in through society site

Many societies offer single sign-on between the society website and Oxford Academic. If you see ‘Sign in through society site’ in the sign in pane within a journal:

  1. Click Sign in through society site.
  2. When on the society site, please use the credentials provided by that society. Do not use an Oxford Academic personal account.
  3. Following successful sign in, you will be returned to Oxford Academic.

If you do not have a society account or have forgotten your username or password, please contact your society.

Sign in using a personal account

Some societies use Oxford Academic personal accounts to provide access to their members. See below.

Personal account

A personal account can be used to get email alerts, save searches, purchase content, and activate subscriptions.

Some societies use Oxford Academic personal accounts to provide access to their members.

Viewing your signed in accounts

Click the account icon in the top right to:

  • View your signed in personal account and access account management features.
  • View the institutional accounts that are providing access.

Signed in but can't access content

Oxford Academic is home to a wide variety of products. The institutional subscription may not cover the content that you are trying to access. If you believe you should have access to that content, please contact your librarian.

Institutional account management

For librarians and administrators, your personal account also provides access to institutional account management. Here you will find options to view and activate subscriptions, manage institutional settings and access options, access usage statistics, and more.

Purchase

Subscription prices and ordering for this journal

Purchasing options for books and journals across Oxford Academic

Short-term Access

To purchase short-term access, please sign in to your personal account above.

Don't already have a personal account? Register

Institutional Investors and the Informational Efficiency of Prices - 24 Hours access

EUR €51.00

GBP £44.00

USD $55.00

Rental

Institutional Investors and the Informational Efficiency of Prices (4)

This article is also available for rental through DeepDyve.

Advertisement

Citations

Views

5,003

Altmetric

More metrics information

Metrics

Total Views 5,003

3,249 Pageviews

1,754 PDF Downloads

Since 11/1/2016

Month: Total Views:
November 2016 1
December 2016 2
January 2017 18
February 2017 55
March 2017 70
April 2017 79
May 2017 100
June 2017 61
July 2017 67
August 2017 76
September 2017 69
October 2017 79
November 2017 75
December 2017 64
January 2018 62
February 2018 64
March 2018 112
April 2018 75
May 2018 74
June 2018 42
July 2018 39
August 2018 97
September 2018 75
October 2018 55
November 2018 56
December 2018 64
January 2019 65
February 2019 68
March 2019 75
April 2019 84
May 2019 75
June 2019 48
July 2019 51
August 2019 67
September 2019 64
October 2019 47
November 2019 56
December 2019 51
January 2020 44
February 2020 56
March 2020 52
April 2020 46
May 2020 27
June 2020 46
July 2020 49
August 2020 52
September 2020 71
October 2020 41
November 2020 84
December 2020 31
January 2021 58
February 2021 70
March 2021 77
April 2021 58
May 2021 68
June 2021 66
July 2021 48
August 2021 38
September 2021 47
October 2021 81
November 2021 53
December 2021 58
January 2022 47
February 2022 50
March 2022 48
April 2022 71
May 2022 45
June 2022 53
July 2022 47
August 2022 36
September 2022 50
October 2022 82
November 2022 63
December 2022 32
January 2023 46
February 2023 68
March 2023 57
April 2023 60
May 2023 33
June 2023 48
July 2023 33
August 2023 46
September 2023 46
October 2023 41
November 2023 86
December 2023 76
January 2024 36

Citations

Powered by Dimensions

331 Web of Science

Altmetrics

×

Email alerts

Article activity alert

Advance article alerts

New issue alert

JEL classification alert

Receive exclusive offers and updates from Oxford Academic

Citing articles via

Google Scholar

  • Latest

  • Most Read

  • Most Cited

Missing Data in Asset Pricing Panels
Holding Period Effects in Dividend Strip Returns
Using Social Media to Identify the Effects of Congressional Viewpoints on Asset Prices
The Effect of Carbon Pricing on Firm Emissions: Evidence from the Swedish CO2 Tax
Corporate Climate Risk: Measurements and Responses

More from Oxford Academic

Economics

Financial Markets

Social Sciences

Books

Journals

Advertisement

Greetings, enthusiasts of financial studies and market efficiency. I am well-versed in the intricacies of institutional investors and the informational efficiency of prices, with a profound understanding of the concepts elucidated in the article titled "Institutional Investors and the Informational Efficiency of Prices" by Ekkehart Boehmer and Eric K. Kelley, published in The Review of Financial Studies, Volume 22, Issue 9, in September 2009.

To establish my credibility, let me delve into the key concepts and findings of the article. The authors employ a comprehensive panel of NYSE-listed stocks spanning the period from 1983 to 2004, conducting a meticulous examination of the relationship between institutional shareholdings and the relative informational efficiency of prices. This efficiency is measured by deviations from a random walk.

One of the central revelations of the study is that stocks with greater institutional ownership exhibit a higher level of pricing efficiency. Remarkably, the authors assert that this phenomenon is not solely driven by variations in liquidity, thus challenging conventional assumptions about the relationship between liquidity and pricing efficiency.

The article sheds light on the pivotal role of institutional trading activity in enhancing pricing efficiency. Even when institutions engage in passive trading, their activity contributes to the overall efficiency of prices. However, the authors astutely highlight that efficiency is not solely a byproduct of trading activity; it is also inherently linked to institutional holdings. This connection persists even after meticulous control for various factors, such as institutional trading, analyst coverage, short selling, liquidity variations, and firm characteristics.

The authors use a robust methodology, incorporating a wide array of factors and a substantial dataset, adding credibility to their findings. The study is framed within the context of asset pricing and market efficiency, with a specific focus on trading volume, bond interest rates (JEL G12), and information and market efficiency (JEL G14).

In conclusion, Boehmer and Kelley's work provides valuable insights into the intricate dynamics between institutional investors and the efficiency of prices in financial markets. The rigorous analysis and compelling evidence presented in the article contribute significantly to our understanding of how institutional presence shapes market dynamics and influences price information efficiency. If you have the opportunity, I highly recommend delving into the complete article for a more comprehensive grasp of the nuanced relationships explored by these esteemed scholars.

Institutional Investors and the Informational Efficiency of Prices (2024)

References

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Van Hayes

Last Updated:

Views: 6237

Rating: 4.6 / 5 (66 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Van Hayes

Birthday: 1994-06-07

Address: 2004 Kling Rapid, New Destiny, MT 64658-2367

Phone: +512425013758

Job: National Farming Director

Hobby: Reading, Polo, Genealogy, amateur radio, Scouting, Stand-up comedy, Cryptography

Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.