The Effect of Algorithmic Trading on Management Guidance Journal Article uri icon

Overview

abstract

  • ABSTRACT; I investigate whether algorithmic trading (AT) affects the provision of management guidance. Existing research finds that AT decreases fundamental information acquisition before earnings announcements and consequently reduces the informativeness of prices. To compensate for reduced information acquisition, I predict and find that managers at firms with more AT activity increase the quantity and quality of guidance issued at earnings announcements. Evidence is consistent with managers responding to reduced information acquisition, as opposed to changes in liquidity, and results suggest guidance in response to AT is effective at reducing information asymmetry. These findings identify a new channel through which AT affects stock price informativeness by documenting a link to managers’ disclosure decisions.; Data Availability: Data are available from the public sources cited in the text.; JEL Classifications: G14; G19; G10.

publication date

  • June 1, 2024

has restriction

  • closed

Date in CU Experts

  • June 26, 2024 1:49 AM

Full Author List

  • Stephan A

author count

  • 1

Other Profiles

International Standard Serial Number (ISSN)

  • 0001-4826

Electronic International Standard Serial Number (EISSN)

  • 1558-7967

Additional Document Info

start page

  • 1

end page

  • 29