This dissertation examines institutional investors;; trading behavior in a sample of322 firms alleged in Accounting, Auditing, and Enforcement Releases to havemanipulated their accounting earnings (hereafter fraud firms). Over the course ofthe fraud period, I find that institutions increase their ownership in fraud firms byapproximately 14 percent, resulting in institutional losses of approximately $138billion. Although institutional investors;; losses are significant, I find that in thequarter immediately prior to the public revelation of accounting frauds, institutionswith short investment horizons (;;transient;; institutions) slightly mitigate theirlosses by decreasing their ownership in fraud firms. I also provide evidence thatinstitutions that own fraud firm shares prior to a fraud and have large stakes infraud firms, have large portfolios, or own a relatively large block of fraud firmshares divest shares prior to the public revelation of a fraud.