On Institutional Investors and Firm Performance: A Disaggregated View
2009 (English)In: Journal of Multinational Financial Management, ISSN 1042-444X, E-ISSN 1873-1309, Vol. 19, no 5, 370-394 p.Article in journal (Refereed) Published
We study the relationship between institutional ownership and firm performance in Finland. A systems approach is employed to investigate the potential two-way causality between firm performance and ownership structure. Three-stage least squares estimation technique is used to solve for the systems. The evidence suggests an endogeneity problem between firm performance and institutional ownership. However, the magnitude of the problem differs with respect to the concentration of ownership measure used. Our results show that a more equal distribution of the voting power among the largest institutional stakeholder may exert positive effects on firm performance. We also find a significant difference relating to firm performances and equity ownerships between the two classes of institutional investor. Consistent with the ownership structure in Finland, we find that a simple ownership concentration index does not influence firm performance.
Place, publisher, year, edition, pages
2009. Vol. 19, no 5, 370-394 p.
Institutional ownership; Firm performance; 3SLS; System of equations; Two-way feedback
IdentifiersURN: urn:nbn:se:su:diva-63914DOI: 10.1016/j.mulfin.2009.07.004OAI: oai:DiVA.org:su-63914DiVA: diva2:453464