Search results

Prior studies examining the relation between the shareholdings by institutional investors and firm value have produced mixed results. These studies have assumed that a linear relation exists between corporate value and institutional shareholdings. The purpose of this study is to further investigate the nature of this relationship and by partitioning institutional investors into institutions that have appointed a representative to the board of directors of the firms in which they have a block investment and institutions with a similar holding but without a representative on the board of directors.

The study is based on a sample of 123 firms with available financial and institutional ownership data. A cross‐sectional regression analysis is used to test the relation between corporate value and institutional ownership with and without board representation.

The results of the study suggest that share ownership by investors with board representation is positively related to the value of the firm at lower levels of ownership. However, as the share ownership increases, the impact on the value of the firm becomes negative, giving rise to a non‐linear relation. The extent of shareholding by institutions without board representation, on the other hand, is not related to the value of the firm.

The findings show that institutions with board representation have greater incentives to monitor management, and therefore their presence should have a positive influence on firm value. However, at high levels of ownership, institutional investors with board representation may induce boards of directors to make sub‐optimal decisions.

The study provides a deeper understanding of the relationship between firm value and institutional ownership. That is, the effect of shareholding by institutions with board representation is likely to have a non‐linear relation with firm value.

Documents evidence on the interdependence between the mechanisms used to control the agency costs in Turkish manufacturing firms where the external control devices are restricted and most of the firms have concentrated ownership. The ownership concentration, board size and composition, managerial shareholdings, institutional shareholdings, and family shareholdings are the selected devices. Evidence reveals that the proportion of insiders on the board is positively related to the percentage of family shareholdings and negatively related to the percentage of foreign institutional shareholdings and ownership concentration. Board size shows a significant negative relation with all the control mechanisms except the debt ratio. The finding that the managerially controlled firms have lower debt ratio than the institutionally controlled firms and the family controlled firms supports the entrenchment hypothesis. The capital market seems to complement the institutional shareholdings, family shareholdings, and ownership concentration in monitoring the CEOs.

The purpose of this study is to empirically investigate the relationship between executive shareholding, institutional investor shareholding and corporate innovation, and to further explore in depth the impact of executive shareholding on corporate innovation under different industries.

This paper uses the panel data of A-share listed companies in Shanghai and Shenzhen from 2012 to 2020 as the research sample to empirically study the relationship between executive shareholding, institutional investor shareholding and corporate innovation based on multiple linear regression models and panel fixed effects.

The research shows that: on the whole, the impact of executive shareholding on enterprise innovation presents an inverted “U” shape; institutional investors will negatively regulate the impact of executive shareholding on enterprise innovation; the impact of executive shareholding on enterprise innovation will show obvious industry differences in different industries.

The empirical results not only enrich the research on the effects of institutional investors' involvement in corporate governance practice, but also provide targeted experience for promoting enterprise innovation. Due to the limitations of innovation indicators and industry sample selection, it is necessary to be cautious when extending the results to other fields.

Enterprises should fully consider the impact of executive shareholding on innovation and formulate a scientific executive incentive system according to the differences of their industries. The government should be aware of the important role of institutional investors in enterprises, improve the channels and ways for institutional investors to participate in corporate governance, and improve the basic system of capital markets.

On the one hand, this paper empirically tests the regulatory role of institutional investors' shareholding and the relationship between executive shareholding and enterprise innovation, which enriches the research on the effect of institutional investors' involvement in corporate governance practice. On the other hand, the research by industry is more targeted to provide experience for promoting enterprise innovation.

This paper discusses whether institutional investors change the shareholding ratio of listed companies through research meeting, and whether this active investment mode can really improve the investment efficiency of institutional investors.

Using empirical research method, this study designs and conducts an empirical research according to empirical research's basic norms. Thus, we acquire needed and credible empirical data. This study analyzes whether institutional investors seek their private interest in researched companies by analyzing their research meetings and the shareholding ratios of different types of institutional investors using Shenzhen Stock Exchange data on listed firms from 2014 to 2018.

This study finds that the research meetings of institutional investors provide participants with reliable information which supports the decision of institutional investors to change their shareholding ratio. The stock price growth rate strengthens the positive correlation between the research meetings of institutional investors and the shareholding ratio of institutional investors. Additionally, transactional institutional investors increase the shareholding ratio, while holding institutional investors do not.

This paper combines the behavior of institutional investors with the holding status of institutional investors, and discusses the impact of institutional investors' behavior on investment decisions. At the same time, it classifies the institutional investors and discusses the attitude of different types of institutional investors towards this active investment mode.

This research seeks to understand how shareholder constituencies including controlling family, nonfamily insiders, as well as domestic and foreign institutions in the corporate governance system of emerging economy firms perceive institutional risks in terms of regulative, normative, and cognitive institutions and influence strategic choices in the internationalization of their invested firms.

The sample data are Taiwanese publicly listed companies in the electronics and computer industry. Panel data of the parent firms and their overseas affiliates are available from the annual report and Taiwan Economic Journal database. Country-level data are available from the World Investment Report and the IMD World Competitiveness Report. Statistical regression models including tobit and logistic regression are used to analyze the data.

Controlling family and nonfamily insider shareholders tend to influence their invested firms to enter in institutionally smaller host countries through a shared ownership. Domestic institutional shareholders tend to influence their invested firms to adopt a shared ownership and enter in host countries with larger and smaller institutional distances in terms of regulative and normative institution, respectively. Foreign institutional shareholders tend to influence their invested firms to enter in institutionally smaller host countries through a whole ownership.

The strategic choices of foreign market entry made by emerging economy firms are significantly shaped by the different risk perceptions of shareholder constituencies in their corporate governance system toward the institutional distances between the home and the host country.

The purpose of this paper is to test the relative strengths of efficiency and opportunistic considerations in making client auditor choice decisions in an emerging audit services market. The authors examine whether the degrees of foreign and institutional shareholdings, audit complexity, industry orientation (i.e. whether the firm belongs to the banking sector), ownership concentration in the hands of domestic sponsor shareholders, state ownership, power concentration in the hands of a CEO who is also the chairperson of the board, and audit risk affect the demand for superior monitoring by Big‐4 auditors.

The authors carry out a multivariate analysis using binary logit regression technique. They test whether efficiency or opportunism rules auditor choice of firms in their sample. Efficiency‐based variables used in the authors' models include foreign shareholding by a multinational parent, institutional shareholding, audit complexity and whether the firm belongs to the banking sector. Opportunism‐based variables include ownership concentration in the hands of domestic sponsor shareholders other than government, government shareholding, power concentration in the hands of a CEO who holds the position of chair as well, and audit risk.

The authors find that opportunistic considerations outweigh efficiency considerations in shaping auditor choice decisions in their sample. Two out of four efficiency arguments (foreign shareholdings in the hands of a multinational parent and institutional shareholding) support efficiency as the main driver of auditor choice while one (client belonging to the banking sector) indicates otherwise. On the other hand, three out of four opportunism arguments (government shareholding, CEO‐chair duality and audit risk) document opportunistic considerations to be the main forces behind auditor choice. The influence of foreign shareholding becomes apparent only when the foreign shareholder is the controlling shareholder.

This paper is the first of its kind to address auditor choice in an emerging market context. No other paper looked at auditor choice using efficiency‐opportunism incentives. The paper contributes to our understanding of auditor choice dynamics in emerging markets. The finding that institutional shareholding is associated with choice of high quality auditors is encouraging. Individual small investors can use institutional investors as a shield to protect their investment through the higher quality auditing linked to the presence of institutional investors.

The purpose of this paper is to discuss whether top management will assume their liabilities especially when financial restatement occurs, and,based on the “effective supervision theory” and “strategic cooperation theory,” to examine whether an institutional investor is a supervisor or a cooperator considering the management turnover caused by financial restatement in the companies.

Using a sample of the A-share-listed companies from year 2010 to year 2014 and dividing financial restatement into fraudulent financial restatement and other financial restatement, the authors examine the relationship between financial restatement and abnormal management turnover, which usually is related to the management integrity or capacity. By using group test methods, the authors test the influence of the institutional investors’ shareholding on the relation between financial restatements and management turnover.

This paper finds that financial restatement can result in abnormal management turnover, especially the fraudulent financial restatement. The institutional investors usually are supervisors but when the shareholding of institutional investor is too high and the management turnover results from fraudulent financial restatement, the institutional investors may become cooperators with management in the companies. Besides, the institutional investors play the supervisory function more significantly in non-state-owned enterprises.

This paper expands literature of the institutional investors in the corporate governance area and provides a basis for future research in the area of the institutional investors’ governance effect. It divides financial restatements into fraudulent financial restatement and other financial restatement and examines the relationship between financial restatement and abnormal management turnover so as to provide evidence about whether the management will assume their responsibilities when there is financial restatement in the company. It also tests whether the institutional investors will play supervisor’s or cooperator’s function in state-owned and non-state-owned enterprises.

As Chinese stock market develops and grows, mutual fund plays an increasingly important role for strong financial strength and good social resources. This paper aims to present an overview of fund investment effect, identify the investment preference of institutional investors and explore the socially responsible investment value of mutual fund, especially green fund.

In order to test the green effects in the fund market, especially from the perspective of institutional shareholding, the authors build three panel data models to examine the attention, promotion and network effect respectively.

In general terms, the authors obtain a positive relationship between mutual funds and green firms (attention effect). This positive relationship is conducted by the comparison of institutional shareholding level between green firms and non-green firms by using two-sample t-test. The authors find that although all the coefficients of mutual funds' shareholding variables are positively related to social performance, only the number of mutual fund shareholders shows slight significance. The authors observe a stronger promotion effect of green funds on social performance than the other mutual funds (promotion effect). From a network perspective as well as previous social capital research, the mutual funds shareholding network shows a significant and positive effect on the firm's social performance in the firm–fund network (CFClose) as well as in the firm–firm network (CCClose), while the coefficients of closeness in the firm and green fund network are positive but non-significant (network effect).

Although some valuable findings have been documented, there is a great potential to be further explored. For example, how to guide more green funds to solve the finance problem of middle and small-sized firms may be another crucial task for the point of view of government or industry level. While at the mutual fund level, it is essential to positively participate in and fulfill the environment duty of listed firms which can not only satisfy the expectation of environment value investment.

The fund market has witnessed unprecedented growth in China and plays an important role in promoting the development of green industries. This indicates the practice of mutual funds as socially responsible investment in China. Some effective measures should be taken to incentive the mutual funds to continually invest in environment-friendly firms, which would benefit to the promotion of social performance driven by financing innovation.

The ESG issue is a global one that needs the participation of the countries worldwide. As one of the most important emerging markets, regulators in China should consider taking more action in promoting ESG concerns. To some extent, institutional investments can actually reflect how the responsible investments are going in this market.

This paper provides a systematic empirical analysis of Chinese fund market in the view of institutional investor preference. Three green effects, namely attention, promotion and network effects, are put forward, which have not been employed in previous studies. Our work is useful for understanding sustainable finance which has been elevating into national strategy.

The purpose of this paper is to study the impact of institutional shareholdings on earnings management activities of their portfolio firms.

Using a final sample of 94 top firms on the Bursa Malaysia based on market capitalization as at 31 December 2007, this paper uses the magnitude of discretionary accruals as the proxy for earnings management. The paper measures the aggregate institutional ownership percentage of shareholdings of the five top institutional investors which are further divided into two categories: pressure sensitive consisting of percentage ownership by banks and insurance companies; and pressure insensitive institutional investor consisting of percentage shareholdings by unit trusts, pension funds and state‐owned institutions. Data were collected over a six‐year period from 2002 to 2007. The year it started was also when all the listed companies in Bursa Malaysia started adopting the MCCG requirements as mandatory reporting in annual reports.

The results show that only Malaysia Shareholders Watchdog Group (MSWG) institutional shareholdings are effective in mitigating self‐serving earnings management behavior of their portfolio firms. Within MSWG shareholdings, Permodalan National Berhad (PNB) is the most effective institutional shareholder in mitigating opportunistic earnings management behavior. Overall, the findings suggest that ownership may not be enough to mitigate earnings management. Firms may have to engage in shareholder activism such as through proxy voting and establishing direct dialogues with management in order to preserve the value of their investments.

One of the limitations in this study is measurement error which is a critical problem for studies on earnings management. Hence, this study inherits all the limitations of the Jones model although it is noted that it and the modified Jones model are extensively used in earnings management literature. Overall, this study provides empirical evidence to assess the merits of calls for institutional investors to play a greater role in portfolio firms' corporate governance practice in Malaysia. In essence, the results from the study provide evidence that ownership alone is not enough and institutional investors need to be involved in shareholder activism in order to be effective as an external monitor. In other words, by engaging in shareholder activism, institutional investors would be better able to safeguard the value of their investment. Moreover, the size of their shareholdings should provide powerful incentive for them to monitor their investee firms.

This is the first published paper that focuses on institutional investors and earnings management in Malaysia, as previous studies have focused more on developed countries. This study aims to provide empirical evidence on the effectiveness of institutional investors in mitigating opportunistic earnings management, in order to ascertain their generalizability to developing countries like Malaysia.

This paper aims to examine if compliance with the Japanese Stewardship Code by institutional investors is related to the earnings quality of their investee companies. It extends the study by Lu et al. who considered this question for large UK companies with high-quality board governance and a rich information environment. This study provides new insights by exploiting the contrasting Japanese setting.

The association between Code-compliant institutional investor shareholding and discretionary accruals is examined for Japanese companies in the Nikkei 225 Index. The study period is from the introduction of the Code in 2015 to 2017.

A negative association is found between the level of institutional investor Code-compliant shareholding and discretionary accruals, which is robust to tests that address endogeneity. The findings suggest Code-compliant institutional investor shareholding mitigates opportunistic income-increasing earnings management and promotes conservative accounting. Consistent results are found for benchmark beating and accruals quality as alternative earnings quality measures.

This study offers new insights regarding the efficacy of the Stewardship Code’s policy approach. The findings suggest the stewardship regulatory model is effective when internal governance is weak and external monitoring by institutional investors is a viable substitute or complement.