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Institutional Ownership and Firm Performance: A Global Analysis


Institutional Ownership and Firm Performance: A Global Analysis

Cen, Yusheng (2019) Institutional Ownership and Firm Performance: A Global Analysis. Masters thesis, Concordia University.

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In this thesis, I analyze the roles of different institutional investors and how they affect firm performance based on a global dataset of 31 countries (regions) from 2007 to 2016. Breaking down institutions by geographic information (domestic or foreign) and type (such as mutual fund or pension funds), I first find that all institutions share preference for large firms, firms that experienced negative stock returns, and firms with lower leverage and high liquidity. I also find that various types of institutional investors affect firms’ operating performance differently. The relation is convex for foreign institutions, while the opposite is true for domestic institutions. This indicates that foreign institutional investors exert better corporate governance when ownership is high, while domestic institutions are subject to business ties with firms when they hold substantial amounts of voting rights. Further analysis reveals a U-shaped relationship between firms’ operating performance and the ownership level of investment advisors/bank trusts/pension funds, indicating a monitoring effect with high levels of ownership. However, mutual funds exhibit a concave influence on firm value, signifying negative impact of business ties when ownership is high. The findings for other types of institutions (hedge fund and insurance companies) are inconclusive.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Cen, Yusheng
Institution:Concordia University
Degree Name:M. Sc.
Date:17 December 2019
Thesis Supervisor(s):Schweizer, Denis
ID Code:986206
Deposited By: Yusheng Cen
Deposited On:25 Jun 2020 19:59
Last Modified:25 Jun 2020 19:59
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