Institutional Investors and Corporate Governance

Institutional investor heterogeneity and analyst recommendation: Malaysian evidence

“…In short, institutional investors represent an effective governance mechanism that alleviates agency conflict, resulting in better company outcomes. However, recent studies recommend researchers to consider the heterogeneity of institutional investors rather than seeing them as a homogeneous group (Chichernea et al, 2015;Dasgupta et al, 2020;De-la-hoz & Pombo, 2016;Garel, 2017;Muniandy et al, 2016;Oikonomou et al, 2020).…”

“…Institutional investors may have different investment horizons and engage in different forms of governance, with differential effects on company outcomes (Dasgupta et al, 2020;Edmans, 2014). For example, short-term (transient) institutional investors monitor companies' activities via "exit", that is through informed selling, without actually trying to intervene (Edmans, 2014).…”

The Role of Institutional Investors in International Corporate Governance: Contemporary Paradigms and Perspectives

“…The massive growth of the global asset management industry in recent decades has led to a large‐scale intermediation of equity ownership (Ben‐David et al, 2021; Dasgupta et al, 2021). As a result, institutional investors are ubiquitous nowadays; virtually every corporation of every size in every country has them in its ownership base.…”

“…Empirical evidence suggests that different groups of institutional investors have different effects on corporate policies in a wider sense, including information efficiency and reporting, payout and capital structure policy, cost of capital, innovation, allocation efficiency (in particular, mergers and acquisitions), and corporate social responsibility. The excellent survey articles by Johnson et al (2010), Goranova and Ryan (2013), Dasgupta et al (2021), Franks (2020), and Matos (2020) provide summaries of this literature. Hedge fund activism, one particularly prominent aspect of the role institutional investors play in corporate governance, is surveyed in Brav et al (2015) and Ahn and Wiersema (2021).…”

The Wall Street Stampede: Exit As Governance with Interacting Blockholders

“…The co-existence of multiple institutional blockholders with differing organizational and incentive structures is widespread. Using data from 1999 to 2017, Dasgupta et al (2021) report that the average US firm had over 11 institutional blockholders with 1% or more of shares. They also document significant heterogenenity in blockholdings.…”