Institutional ownership, peer pressure and voluntary disclosures

Yupeng LIN, Ying MAO, Zheng WANG

Research output: Journal PublicationsJournal Article (refereed)peer-review

51 Citations (Scopus)


We document peer effect as an important factor in determining corporate voluntary disclosure policies. Our identification strategy relies on a discontinuity in the distribution of institutional ownership caused by the annual Russell 1000/2000 index reconstitution. Around the threshold of the Russell 1000/2000 index, the top Russell 2000 index firms experience a significant jump in institutional ownership compared with their closely-neighbored bottom Russell 1000 index firms due to index funds' benchmarking strategies. The increase in institutional ownership and resultant improvement in the information environment of the top Russell 2000 index firms create pressures on their industry peers to increase voluntary disclosures. Consistent with this prediction, we find that the discontinuously higher institutional ownership of the top Russell 2000 index firms significantly increases industry peers' likelihood and frequency of issuing management forecasts. Further analyses show that such an effect could be driven by firms' incentive to compete for capital.
Original languageEnglish
Pages (from-to)283-308
Number of pages26
JournalThe Accounting Review
Issue number4
Early online date23 Oct 2017
Publication statusPublished - Jul 2018


  • Institutional ownership
  • Peer effect
  • Russell Index
  • Voluntary disclosures

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