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Institutional Ownership and Firm Performance: Evidence From Canada

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Institutional Ownership and Firm Performance: Evidence From Canada

Farrell, Michael (2013) Institutional Ownership and Firm Performance: Evidence From Canada. Masters thesis, Concordia University.

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Abstract

This study examines the relationship between institutional ownership and firm performance using a sample of 567 Canadian firms in 2011. The focus on the Canadian firms provides additional insight towards the topic of institutional ownership as a remedial measure towards agency problems, since Canada has shared legal traditions with the United States, but has ownership concentration more comparable to levels in Western Europe and Asia. A distinguishing feature of this study's analysis involves the consideration of institutional investor by type as well as the inclusion of the number of such investors as a measure of ownership.

The effects of institutional ownership on performance measures Tobin's Q, Industry-Adjusted Tobin's Q, and Return on Assets are estimated using ordinary least squares (OLS) and two-stage least squares (2SLS) methodology, where the latter is employed to offset the endogeneity bias to which the OLS method is susceptible. Although several relationships emerged between institutional ownership levels and measures of Tobin's Q in the OLS regression, only a negative relationship between both the percentage and the number of insurance company investors, was observed to be significant once estimated simultaneously under the 2 SLS method. For all measures of performance, Hausman tests reveal that OLS results are biased in multiple instances; meaningful interpretation must rely on the 2 SLS results.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Farrell, Michael
Institution:Concordia University
Degree Name:M. Sc.
Program:Administration (Finance option)
Date:18 November 2013
Thesis Supervisor(s):Bhabra, H. S.
ID Code:978324
Deposited By: MICHAEL FARRELL
Deposited On:30 Jun 2014 20:25
Last Modified:18 Jan 2018 17:46
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