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The study assesses the impact of institutional investor heterogeneity on firm performance in emerging economies. The sample consists of a panel dataset of 219 firms listed on the major stock exchanges of five leading emerging economies in the world (Brazil, Russia, India, China, and South Africa—BRICS). The findings reveal that institutional investors significantly influence the performance of firms in BRICS countries. Based on stake size, large institutional investors are positively related to firm performance, whereas small investors negatively impact firm performance. On the other hand, based on the business relationship with the investee firm, pressure-sensitive investors negatively impact firm performance, whereas pressure-insensitive investors are only weakly related to firm performance. Further, another category of activist pressure-insensitive institutional investors is strongly associated with firm performance. In light of limited studies in emerging economies, the study’s findings seek to provide new and original empirical evidence on the monitoring role of institutional investors in emerging economies. [ABSTRACT FROM AUTHOR]