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Institutional Ownership and Future Stock Returns: An International Perspective

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  • Teodor Dyakov
  • Evert Wipplinger

Abstract

We investigate the risk‐adjusted performance of the aggregate equity holdings and trades of 13,807 active mutual funds located in 16 countries between 2001 and 2014. Using portfolio sorts, we find weak evidence that institutional holdings exhibit positive subsequent risk‐adjusted returns. However, any outperformance is unlikely to stem from short‐term informational advantage: stocks bought do not outperform stocks sold in the subsequent quarter. This finding is robust to regressions of subsequent stock returns on changes in institutional ownership and holds for different measurements of institutional trading.

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  • Teodor Dyakov & Evert Wipplinger, 2020. "Institutional Ownership and Future Stock Returns: An International Perspective," International Review of Finance, International Review of Finance Ltd., vol. 20(1), pages 235-245, March.
    • Handle: RePEc:bla:irvfin:v:20:y:2020:i:1:p:235-245
    DOI: 10.1111/irfi.12203
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    Cited by:

    1. Artiga Gonzalez, Tanja & Dyakov, Teodor & Inhoffen, Justus & Wipplinger, Evert, 2024. "Crowding of international mutual funds," Journal of Banking & Finance, Elsevier, vol. 164(C).
    2. Panda, Brahmadev & Tripathy, Sasikanta & Kumar, Gaurav, 2024. "Does US financial crisis influence the relationship between ownership holdings and stock performance? The case of a developing economy," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    3. David R. Gallagher & Graham Harman & Camille H. Schmidt & Geoffrey J. Warren, 2022. "Global equity fund performance adjusted for equity and currency factors," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1535-1565, April.

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