Quasi-Indexer Ownership and Financial Statements Comparability

We find a positive effect of quasi-indexer ownership on financial statements comparability. Using the annual Russell 1000/2000 index reconstitution as an exogenous variation in quasi-indexer ownership, we show that the positive effect seems to be causal. We interpret our finding as evidence consistent with the view that quasi-indexers have a predilection for financial statements comparability in order to better monitor the performance of portfolio firms and allocate capital in response to fund flows. We show that the positive effect of quasi-indexer ownership on financial statements comparability varies across subsamples in ways consistent with our interpretation