Date of Award
Doctor of Philosophy
Eric Kelley, Larry Fauver, Bruce Behn
In this paper I investigate institutional ownership and trading across the supply chain. I find that institutions are more likely to own stock in a supplier firm, if they own stock in an economically linked customer firm. Institutions with stock in a pair of customer-supplier linked firms (i.e. joint owners) experience abnormal trading profits in supplier stocks. The magnitude of trading profits increases when institutions own a larger stake in the customer and when the supplier relies upon a concentrated customer base for sales revenue. Furthermore, I document that joint owner trading predicts unexpected earnings news, consistent with these institutional investors extracting material information from economic relationships. The results show that the supply chain is a rich source of information through which some skilled traders can forecast firm fundamentals and realize trading profits.
Alldredge, Dallin Max, "The Performance of Institutional Investor Trades Across the Supply Chain. " PhD diss., University of Tennessee, 2015.