Economic theory suggests that the industry-wide component of firm performance is more persistent than the firm-specific component. This paper provides evidence on this assertion and tests whether investors misprice these components of earnings. Consistent with predictions, we find greater...

Over 70% of publicly traded U.S. firms are interconnected through institutional investors' cross-blockholding. We study the implications of such emerging ownership patterns for financial reporting, and document a robust, negative association between accruals and institutional cross-blockholding....