Selective Disclosure Associated with Institutional Investors: Evidence Based on Chinese Stock Market

This paper investigates the phenomenon of selective disclosure associated with institutional investors in Chinese stock market. Based on a unique database that reveals the daily trading and the identities of institutions, we show that institutions on average possess private information regarding public firms’ impending non-earnings significant news. More importantly, we show that the information advantage of institutions is associated with their abil- ity to obtain private information from firm management. The findings shed light on the issue of developing fair information disclosure among all market participants.