Do Institutional Investors Stabilize Equity Markets in Crisis Periods? Evidence from COVID-19

• 成果类型: Article; Early Access
• 署名作者: Glossner, Simon; Matos, Pedro; Ramelli, Stefano; Wagner, Alexander F.
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; University of Virginia; European Corporate Governance Institute; University of St Gallen; Swiss Finance Institute (SFI); University of Zurich; Centre for Economic Policy Research - UK; University of Zurich
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.03411
• 发表日期: 2025
• 关键词: CASH HOLDINGS; Corporate debt; Covid-19; fire sales; INSTITUTIONAL OWNERSHIP; leverage; RETAIL INVESTORS; Systemic risk; Tail risk

摘要

During the COVID-19 stock market crash, U.S. stocks with higher institutional ownership (IO) performed worse than those with lower IO. By studying firm-level changes, we identify two mechanisms behind this effect: a sudden downscaling of institutional capital in the equity market and a collective attempt by institutions to reposition their equity portfolios toward more COVID-resilient stocks. The stock price effects of their portfolio downscaling trades quickly reversed in the market's recovery phase, whereas those of their portfolio repositioning trades lingered. The institutional rush for firm resilience also caused price pressures, with retail investors providing liquidity to stocks sold by institutional investors, both during the crisis and afterward. Overall, our results indicate that when a tail risk is realized, institutional investors amplify price crashes.