Journal
ACCOUNTING REVIEW
Volume 95, Issue 2, Pages 113-139Publisher
AMER ACCOUNTING ASSOC
DOI: 10.2308/accr-52498
Keywords
information acquisition; investor expectations; sophisticated traders; EDGAR
Categories
Funding
- Brigham Young University Marriott School of Management
- Ohio State University Fisher College of Business
- George Mason University School of Business
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In this study, we examine whether investors' actions to acquire accounting information are predictive of future firm performance because these actions partially reveal investors' private expectations of this performance. Using a database of EDGAR downloads, we find some evidence that information acquisition of accounting reports by EDGAR users is, on average, predictive of future firm performance. We then determine the identity of the EDGAR user and examine whether different users' private expectations will be relatively more predictive of subsequent performance. We find that the information acquisition activities of more sophisticated institutional users (e.g., hedge funds, investment banks) are more strongly associated with future performance than are those of less sophisticated retail users. Finally, we find that information acquisition by sophisticated institutions is a leading indicator of their equity holdings. In summary, this study provides evidence of predictive information embedded in sophisticated investors' actions to acquire accounting information.
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