Institutional ownership and corporate investment performance

Scott Fung, Shih Chuan Tsai

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper examines the role of institutional investors in improving firm performance through the channel of corporate investment decisions. We find that the interaction effect between institutional ownership and capital expenditures is significantly related to firm performance. We examine this relationship for different types of institutional investors, and find that investment advisors are most effective monitors in improving firm performance through corporate investment. Moreover, we find that the monitoring role of institutional investors becomes more important when internal governance is weak. Institutional ownership and other forms of corporate governance mechanisms (including CEO incentive compensation and control, shareholder right provisions, and board of director monitoring) operate as substitutes, rather than complements, in improving capital expenditure decisions.

Original languageEnglish
Pages (from-to)348-365
Number of pages18
JournalCanadian Journal of Administrative Sciences
Volume29
Issue number4
DOIs
Publication statusPublished - 2012 Dec 1

Fingerprint

investor
firm
expenditures
monitoring
performance
board of directors
Shareholders
Monitoring
shareholder
corporate governance
incentive
governance
interaction
Institutional investors
Investment performance
Institutional ownership
Corporate investment
Firm performance
Capital expenditures
Corporate governance mechanisms

Keywords

  • Corporate governance
  • Corporate investments
  • Firm performance
  • Institutional ownership

ASJC Scopus subject areas

  • Business and International Management
  • Public Administration
  • Marketing
  • Management of Technology and Innovation

Cite this

Institutional ownership and corporate investment performance. / Fung, Scott; Tsai, Shih Chuan.

In: Canadian Journal of Administrative Sciences, Vol. 29, No. 4, 01.12.2012, p. 348-365.

Research output: Contribution to journalArticle

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