We study the interplay between stock price stability and the information environment following periods of institutional distraction. Using a large panel dataset over the years 1982–2016, we find that the level of ownership by distracted institutions significantly explains crash risk independent of additional determinants identified in prior research. Distraction has a pronounced effect on crash risk among firms that are subject to greater information opacity. Furthermore, we identify a causal impact of institutional distraction on the quality of the information environment that persists over the year following the distraction period. This heightened information asymmetry impedes investors’ ability to process information, leading investors to overreact to bad news.

中文翻译：

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机构分心、信息不对称与股价稳定

我们研究了机构分心时期后股价稳定与信息环境之间的相互作用。使用 1982-2016 年的大型面板数据集，我们发现分心机构的所有权水平显着解释了崩溃风险，而与先前研究中确定的其他决定因素无关。在信息不透明的情况下，分心对公司的崩溃风险有显着影响。此外，我们确定了机构分心对信息环境质量的因果影响，这种影响在分心期之后的一年中持续存在。这种加剧的信息不对称阻碍了投资者处理信息的能力，导致投资者对坏消息反应过度。