Management earnings forecasts, earnings announcements, and institutional trading in China

Yan Leung Stephen CHEUNG, Xuandong LUO, Weiqiang TAN, Tusheng XIAO

Research output: Contribution to journalArticles

3 Citations (Scopus)

Abstract

In this study, we investigate the trading behavior of institutional investors in China according to management earnings forecasts (MEFs) and earnings announcements (EAs). MEFs are mandatory under the stringent regulatory framework in China. We find evidence that both MEFs and EAs have an effect on the market. However, MEFs have a bigger effect on the market than do EAs. According to a sample of semiannual observations of firms from 2003 to 2008, we find that changes in the stock ownership of institutions are positively associated with EAs but not significantly associated with MEFs. When we further examine the relations between institutional characteristics and trading strategies, we find that growth funds exploit the arbitrage opportunity of MEFs. Copyright © 2014 Taylor & Francis Group, LLC. All rights reserved.
Original languageEnglish
Pages (from-to)184-203
JournalEmerging Markets Finance and Trade
Volume50
DOIs
Publication statusPublished - Apr 2015

Citation

Cheung, Y.-L., Luo, X., Tan, W., & Xiao, T. (2015). Management earnings forecasts, earnings announcements, and institutional trading in China. Emerging Markets Finance and Trade, 50, 184-203.

Keywords

  • Management earnings forecasts
  • Earnings announcement
  • Institutional trading
  • China

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