Does Governance Travel around the World? Evidence from Institutional Investors

Aggarwal, Reena; Erel, Isil; Ferreira, Miguel A.; Matos, Pedro

doi:10.2139/ssrn.1361143

Cited by 217 publications

(295 citation statements)

References 61 publications

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“…They also confirm the monitoring role of foreign and independent institutions. Aggarwal et al (2011) confirm that international institutional investment serves as an important channel for improving corporate governance.…”

Section: Global Institutional Ownershipmentioning

confidence: 63%

“…In contrast, the literature on international institutional ownership had been rather limited until recently as the FactSet LionShares Global Ownership database becomes available (e.g., Ferreira and Matos 2008;Ferreira et al 2010;Aggarwal, Erel, Ferreira, and Matos 2011;Lin, Massa, and Zhang 2014;Pevzner, Xie, and Xin 2015;Iliev, Lins, Miller, and Roth 2015;Bartram, Griffin, Lim, and Ng 2015).…”

Section: Global Institutional Ownershipmentioning

confidence: 99%

See 1 more Smart Citation

Institutional Investors and Cross-Border Mergers and Acquisitions: the 2000-2012 Period

Yang

2016

SSRN Journal

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Section: Global Institutional Ownershipmentioning

confidence: 63%

Section: Global Institutional Ownershipmentioning

confidence: 99%

Institutional Investors and Cross-Border Mergers and Acquisitions: the 2000-2012 Period

Yang

2016

SSRN Journal

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“…Gillan & Starks (2007) provide evidence that institutional investors can instigate governance changes that better discipline management through the simple act of selling shares. In a study of companies from 23 countries, Aggarwal, Erel, Ferreira, & Matos (2011) find that higher institutional ownership increases the likelihood that poorly performing Chief Executive Officers (CEOs) will be terminated and that firm valuation will improve. Institutional investors help to control earnings management (Hadani, Goranova, & Khan, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

Institutional Investors, Stock Repurchases and Information Asymmetry

Scott

2014

International Journal of Financial Research

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This paper seeks to determine if institutional investors influence stock repurchases. Specifically, this study tests whether institutional investors encourage stock repurchases in firms with high information asymmetry. Firm and year fixed effect regressions examining the effect of changes in institutional investor levels to subsequent changes in stock repurchase levels are used. For robustness, regressions are run using difference-GMM regressions and regressions for different time periods on the same relationship. I find that increased institutional ownership leads to increased stock repurchases and this relationship is stronger in firms with higher information asymmetry. Results indicate that institutional investors encourage management to increase repurchases so as to exploit their informational advantage over less informed investors about the true value of the firm. Institutions are the dominant force in U.S. stock ownership. The results in this paper indicate that institutional investors are using their informational advantage in firms that are difficult to value in an attempt to boost their return at the expense of other less informed shareholders.

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“…In a study of companies from 23 countries, Aggarwal, Erel, Ferreira, and Matos (2011) find that higher institutional ownership increases the likelihood that poorly performing Chief Executive Officers (CEOs) will be terminated and that firm valuation will improve. Also, institutional investors help to control earnings management (Hadani, Goranova, & Khan, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

Institutional Investors, Payout Policy, and Agency Costs

Scott

2014

AFR

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This paper seeks to determine if institutional investors influence corporate payout policies. Specifically, this study tests whether institutional investors encourage higher payouts in firms with higher free cash flow and poor growth opportunities. Firm and year fixed effect regressions examining the effect of changes in institutional investor levels to subsequent changes in payout levels are used. For robustness, difference-GMM regressions and regressions for different time periods are performed on the same relationship. Increased institutional ownership leads to increases in total payouts, especially in firms with high free cash flow and poor investment opportunities (low q). According to agency-based free cash flow theory, stockholders should prefer that the management of firms with higher free cash flow and poor investment opportunities increase payouts to shareholders. The results indicate that institutional shareholders reduce agency costs by encouraging management to raise payouts, thus benefiting institutional investors and non-institutional shareholders.

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Does Governance Travel around the World? Evidence from Institutional Investors

Cited by 217 publications

References 61 publications

Institutional Investors and Cross-Border Mergers and Acquisitions: the 2000-2012 Period

Institutional Investors and Cross-Border Mergers and Acquisitions: the 2000-2012 Period

Institutional Investors, Stock Repurchases and Information Asymmetry

Institutional Investors, Payout Policy, and Agency Costs

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