Using order imbalances as a measure of investor trading behavior based on intraday transaction da-ta，this paper empirically investigates institutional investors’immediate reaction to accrual information and its impact on stock prices． The results show institutional investors trade in an accrual-contrarian fashion: they buy low-accrual firms and sell high-accrual firms only when the previously-announced earnings signal is positive． When accrual-contrarian trading exhibited by institutions is intense，the accrual predicts negative short-term stock returns but positive long-term returns． In other words，the stock price experiences a long-term reversal after the earnings announcement． Further investigation suggests the positive predictability of accrual on stock price in the long run cannot be fully explained by risk-based asset pricing models． These results indicate insti-tutional investor’s reaction to accrual information generates a mispricing of accruals induced by market overre-action．