Which Investors Fear Expropriation? Evidence from Investors' Portfolio Choices

Giannetti, Mariassunta; Simonov, Andrei

doi:10.2139/ssrn.423448

Cited by 86 publications

(94 citation statements)

References 34 publications

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“…Recent work by Giannetti and Simonov (2006) shows that institutions appear reluctant to invest in companies with weak corporate governance. Their findings suggest that even if institutions are able and motivated (due to higher stockholdings) to monitor a firm, they prefer to invest in companies in which monitoring might not be necessary.…”

Section: Endogeneitymentioning

confidence: 99%

Motivated monitors: The importance of institutional investors׳ portfolio weights

Fich

Harford

Tran

2015

Journal of Financial Economics

282

132

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a b s t r a c tStudies of institutional monitoring focus on the fraction of the firm held by institutions. We focus on the fraction of the institution's portfolio represented by the firm. In the context of acquisitions, we hypothesize that institutional monitoring will be greatest when the target firm represents a significant allocation of funds in the institution's portfolio. We show that this measure is important in reconciling mixed findings for total institutional ownership in the prior literature. The results indicate that our measure of institutional holdings leads to greater bid completion rates, higher premiums, and lower acquirer returns. This empirical evidence provides support for theories predicting a beneficial effect of blockholders in monitoring the firm in general and in enhancing the gains to takeover targets in particular.

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Section: Endogeneitymentioning

confidence: 99%

Motivated monitors: The importance of institutional investors׳ portfolio weights

Fich

Harford

Tran

2015

Journal of Financial Economics

282

132

View full text Add to dashboard Cite

show abstract

“…In this case, we should observe a strong effect of firm‐level corporate governance on price informativeness in firms with low institutional ownership. However, it is also likely that institutional investors are attracted to well‐governed firms and help improve the firm‐level governance practices, giving rise to a more effective governance structure in these firms (Giannetti and Simonov ; Aggarwal et al. ).…”

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confidence: 99%

Stock Price Informativeness and Corporate Governance: An International Study

2011

Int. Rev. Finan.

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This study investigates the cross-country relationship between firm-level corporate governance and stock price informativeness. Using firm-level data from 22 developed countries, we find that stock price informativeness, as measured by firm-specific stock return variation and future earnings response coefficients, increases with the quality of a firm's corporate governance. Further analyses show that all mechanisms except board-related governance relate positively to stock price informativeness. Finally, firm-level corporate governance plays a more significant role in strengthening the stock returnearnings associations for firms in countries with strong institutional environments. This evidence highlights the role of country-level legal investor protections in shaping the relationship between firm-level corporate governance and stock price informativeness.

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“…Several studies confirm both empirically and theoretically the importance of corporate governance of the home (host) country as an explanation of domestic (foreign) bias in equity markets (e.g. Dahlquist et al , ; Giannetti and Simonov, ;). In equity markets, two types of investors are distinguished: portfolio investors whose returns from the share ownership consist solely of dividends and capital gains/losses and controlling shareholders who draw an additional advantage from their shares, namely, the private benefits from control (Dahlquist et al , ).…”

Section: Related Literaturementioning

confidence: 81%

Impact of Domestic Investor Protection on Foreign Investment Decisions: Evidence from Bond Markets

Pradkhan

2016

Int. J Fin Econ

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This study explores the relationship between domestic creditor protection and foreign investment decisions in bond markets. It also investigates how the difference between domestic and foreign creditor protections affects the foreign investment. The impact of domestic creditor protection on cross‐border investment in bonds is twofold. A high level of domestic creditor protection increases international diversification. At the same time, an efficient protection of creditor rights at home reduces the sensitivity of foreign investment to foreign creditor protection. These results hold most strongly for investing countries with high levels of domestic creditor protection. In addition, this study shows that the difference between domestic and foreign creditor protections matters for investment decisions: if domestic creditor protection is more efficient than foreign creditor protection, the sensitivity of foreign investment to foreign (domestic) creditor protection decreases (increases). Copyright © 2016 John Wiley & Sons, Ltd.

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Which Investors Fear Expropriation? Evidence from Investors' Portfolio Choices

Cited by 86 publications

References 34 publications

Motivated monitors: The importance of institutional investors׳ portfolio weights

Motivated monitors: The importance of institutional investors׳ portfolio weights

Stock Price Informativeness and Corporate Governance: An International Study

Impact of Domestic Investor Protection on Foreign Investment Decisions: Evidence from Bond Markets

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