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During the COVID-19 market crash, U.S. stocks with higher institutional ownership -- in particular, those held more by active, short-term, and more exposed institutions -- performed worse. Portfolio changes through the first quarter of 2020 reveal that institutional investors prioritized corporate financial strength over ‘‘soft’’ environmental and social performance.
Trading data from a large discount brokerage (Robinhood) confirm that retail investors acted as liquidity providers. The effects did not reverse in the second quarter. Overall, the results suggest that when a tail risk realizes, institutional investors amplify price crashes by fire-selling and seeking shelter in ‘‘hard’’ measures of firm resilience.
We construct measures of firms' beliefs about climate regulation, plans for future abatement, and current emissions mitigation from responses to the...
Recent research shows that a high wage gap between managers and workers identifies better-performing firms, but the stock market does not seem to price...