Michela Altieri (Luiss)

Information Technology and Portfolio Allocation: Insights from the Corporate Bond Market

Abstract. We use the adoption of XBRL filing to illustrate how institutional investors reallocate their portfolios. Our findings demonstrate that insurance companies allocate a larger portion of their portfolios to higher-yield bonds by leveraging the new information on firms’ idiosyncratic risk. This holds true only for risk-tolerant investors with concentrated portfolios. Our findings suggest that specialized investors are the ones who benefit the most from the enhanced information environment facilitated by technology.

Joint with Tanja Artiga Gonzalez and Massimo Massa.