Abstract
The relationship between news and investor actions, manifested in stock price changes and changes in trading volume, has been intensely studied within the area of market-based accounting research (MBAR). This paper discusses the causes of investor actions on the basis of a case study of a large Swedish institutional investor. The findings of the case study indicate that when one disaggregates from the market level to the investor level, there is no mechanical relationship between financial information and investment action, as suggested in MBAR. In fact, none of the studied investment actions could be directly linked to the release of a financial report. The findings of the study also demonstrate that decisions regarding equity trades are continuous processes, rather than single points in time, where the main use of accounting information seems to be when there is already some idea of action that needs to be quantitatively evaluated. The factors that seemed to affect the initiation of these decision processes were mainly macro-economic information, private information and different investor conditions. Finally, there were time lags of considerable length, in all of the three main trades studied, between information events and the decision to act.