The results reported in Exhibits 2 and 3 documenting a positive relation between TDAR and the level of institutional ownership are consistent with the effective-monitoring hypothesis.
In addition to the control variables used in the previous section, we also included the announcement-period price reaction (TDAR) as an additional control variable in the event that some analysts use this information to revise their earnings forecasts.(20) We find no relation between AFR and institutional ownership.
In general, there is a significant and positive relation between abnormal forecast revisions in the five-year earnings growth forecast and TDAR. The positive relation between LTAFR and TDAR indicates that equity issue announcements convey information regarding long-term earnings also.
For each of these two groups separately, we estimated weighted least squares regressions between TDAR, AFR and LTAFR with institutional ownership.
16 While Asquith and Mullins |1^ find a positive relation between TDAR and run-up, Masulis and Korwar |20^ find exactly the opposite relation.