Institutional ownership stability and corporate social performance

Wang, Kun Tracy; Sun, Aonan

doi:10.1016/j.frl.2022.102861

Cited by 12 publications

(6 citation statements)

References 28 publications

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“…Second, we employ the three-stage least-squares (3SLS) method following the prior literature (Amin and Sakaki, 2022; Wang and Sun, 2022) and run a simultaneous regression of the recall probability ( Recall ), and institutional ownership stability ( IOP ). The control variables for IOP are Log(Size) , the natural log of the number of shares outstanding ( Log(Shares) ), Share Turnover , and Stock return volatility .…”

Section: Robustness Checksmentioning

confidence: 99%

“…Other studies document that firms with stable institutional investors manage their earnings less (Sakaki et al ., 2017); have lower cost of debt (Elyasiani et al ., 2010); lower future stock price crash risk (Callen and Fang, 2013); higher propensity to pay dividends (Jory et al ., 2017); and a higher level of innovation (Sakaki and Jory, 2019). Regarding non-financial performance, stable institutional ownership enhances corporate social performance (Wang and Sun, 2022) and reduces workplace injury (Amin and Sakaki, 2022).…”

Section: Introductionmentioning

confidence: 99%

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Institutional ownership stability and product quality failures

Le,

Nguyen

2023

IJMF

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PurposeThis study examines the effect of stable institutional investors on firms' product quality failures. Furthermore, the authors investigate the channels through which institutional ownership stability enhances product quality management.Design/methodology/approachThis study uses probit, ordered probit and negative binomial regression frameworks to investigate the research questions. In addition, the authors utilize the three-stage least-squares to address the endogeneity issues.FindingsUsing a sample of product recall incidents from 2012 to 2021, the authors find that firms with more stable institutional ownership have a lower probability, frequency and severity of recall incidents and adopt a proactive product recall strategy. Institutional investors with significant and persistent holdings improve quality management by reducing overinvestment and the use of option-linked and relative performance executive compensations. Furthermore, the influence of stable institutional owners on product quality failures is more pronounced in firms with low managerial ability and specialist CEOs. Lastly, the empirical evidence demonstrates that stable holdings by active investors have a more substantial impact on reducing product recalls than passive and other stable institutional holdings.Originality/valueThis study is the first to examine the impact of institutional ownership stability on firms' product recalls. The authors contribute to the literature on the benefits of stable institutional ownership on firm outcomes and the determinants of product quality failures.

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Section: Robustness Checksmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Institutional ownership stability and product quality failures

Le,

Nguyen

2023

IJMF

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“…Compared with common investors, CAFR institutional investors hold more shares, are more financially literate and have more resources. Therefore, they have more incentives and are better able to collect and analyze corporate information (Wang & Wang, 2017;Wang & Sun, 2022). Institutional investors can monitor firms by voting during shareholder meetings (Chung, Firth, & Kim, 2002) or voting with their feet (Firth, Gao, Shen, & Zhang, 2016), thereby constraining opportunistic managerial behavior.…”

Section: 2mentioning

confidence: 99%

Does the market reward meeting or beating analyst earnings forecasts? Empirical evidence from China

Luo

Wang

2022

CAFR

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PurposeUsing a sample of 9,898 firm-year observations from 1,821 unique Chinese listed firms over the period from 2004 to 2019, this study aims to investigate whether the market rewards meeting or beating analyst earnings expectations (MBE).Design/methodology/approachThe authors use an event study methodology to capture market reactions to MBE.FindingsThe authors document a stock return premium for beating analyst forecasts by a wide margin. However, there is no stock return premium for firms that meet or just beat analyst forecasts, suggesting that the market is skeptical of earnings management by these firms. This market underreaction is more pronounced for firms with weak external monitoring. Further analysis shows that meeting or just beating analyst forecasts is indicative of superior future financial performance. The authors do not find firms using earnings management to meet or just beat analyst forecasts.Research limitations/implicationsThe authors provide evidence of market underreaction to meeting or just beating analyst forecasts, with the market's over-skepticism of earnings management being a plausible mechanism for this phenomenon.Practical implicationsThe findings of this study are informative to researchers, market participants and regulators concerned about the impact of analysts and earnings management and interested in detecting and constraining managers' earnings management.Originality/valueThe authors provide new insights into how the market reacts to MBE by showing that the market appears to focus on using meeting or just beating analyst forecasts as an indicator of earnings management, while it does not detect managed MBE. Meeting or just beating analyst forecasts is commonly used as a proxy for earnings management in the literature. However, the findings suggest that it is a noisy proxy for earnings management.

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“…As a result, it will provide a greater impetus to optimize the value of the company so that the company's performance will increase. This increased performance will be beneficial for shareholders because in other words shareholders will get a lot of benefits in the form of dividends (Wang & Sun, 2022).…”

Section: Institutional Ownershipmentioning

confidence: 99%

Importance of Liquidity Indicators in Intervening the Dividend Policy

Sunaryo

2022

ijtc

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This study aims to determine the effect of managerial ownership, institutional ownership and investment decisions on dividend policy with liquidity as an intervening variable in LQ45 companies listed on the Indonesia Stock Exchange (IDX) for the period 2018-2021. This study uses the causal associative method. This population is 45 companies using purposive sampling method . This research was conducted in LQ45 companies listed on the Indonesia Stock Exchange (IDX) for the period 2018-2021. The type of data used in this study is secondary data and analyzed using SPSS 25. The analysis technique in this study uses regression analysis and path analysis.The results of the analysis show that managerial ownership, institutional ownership and investment decisions partially affect dividend policy. Indirectly, liquidity can intervene in managerial ownership and also institutional ownership on dividend policy, while liquidity cannot intervene in investment decisions on dividend policy.

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Institutional ownership stability and corporate social performance

Cited by 12 publications

References 28 publications

Institutional ownership stability and product quality failures

Institutional ownership stability and product quality failures

Does the market reward meeting or beating analyst earnings forecasts? Empirical evidence from China

Importance of Liquidity Indicators in Intervening the Dividend Policy

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