Publication Type

Journal Article

Version

acceptedVersion

Publication Date

6-2025

Abstract

This study examines whether information sharing occurs within institutional investor networks. I identify networks of institutional investors who share common investments and find that in-network investors earn significantly higher returns than other investors of the same firm, suggesting that valuable private information is shared within these networks. I also find that ownership by investor networks is associated with speedier price discovery and incorporation of more firm-specific news in prices, consistent with information sharing facilitating efficient price formation. In addition, ownership by network investors is associated with higher information risk as reflected in the probability of informed trading and market liquidity. These results are consistent with the dissemination of private information exacerbating the information disadvantage that out-of-network investors face in capital markets. In cross-sectional analyses, I document that evidence of information sharing is stronger in settings with more investor interaction and connectedness.

Keywords

Information dissemination, Informed trading, Institutional ownership, Price discovery

Discipline

Accounting

Research Areas

Corporate Reporting and Disclosure

Publication

Journal of Accounting and Economics

First Page

1

Last Page

26

ISSN

0165-4101

Identifier

10.1016/j.jacceco.2025.101803

Publisher

Elsevier

Additional URL

https://doi.org/10.1016/j.jacceco.2025.101803

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