Search

This paper examines market and institutional ownership reactions to REIT security issuances. Specifically, we examine the short- and long-term market performance of issuing REITs compared to their non-issuing counterparts. We additionally examine changes in systematic and idiosyncratic risk curtailing from security issuances as well as institutional ownership shifts stemming from the sale of new securities. We find that equity issuances are met with negative market reaction in the event window, while there is no significant immediate market reaction to debt issuances. Buy-and-hold abnormal returns are generally higher for equity issuers in comparison to debt-issuing and non-issuing firms. We also find that equity issuances increase systematic risk exposure while both types of security issuances reduce idiosyncratic risk. Finally, we document that serial issuers of both equity and debt see increases in institutional investment following issuances. [ABSTRACT FROM AUTHOR]

Based on the data on Chinese listed companies over the period from 2007–2021, the relationship between common institutional ownership (CIO) and annual report readability (ARR) is revealed in this paper. The results show that CIO reduces ARR. After a series of robustness tests, this conclusion continues to hold. Further analyses indicate that in situations where analyst attention, industry concentration, and media coverage are high, the above negative relationship is more significant. In addition, operational risks play a mediating role between CIO and ARR. This study enriches the evidence supporting the collusive manipulation effect of CIO. [ABSTRACT FROM AUTHOR]

We show that the post-earnings announcement drift (PEAD) is stronger for conglomerates than single-segment firms. Conglomerates, on average, are larger than single segment firms, so it is unlikely that limits-to-arbitrage drive the difference in PEAD. Rather, we hypothesize that market participants find it more costly and difficult to understand firm-specific earnings information regarding conglomerates, as they have more complicated business models than single-segment firms. This in turn slows information processing about them. In support of our hypothesis, we find that, compared to single-segment firms with similar firm characteristics, conglomerates have relatively low institutional ownership and short interest, are covered by fewer analysts, and these analysts have less industry expertise and make larger forecast errors. Finally, we find that an increase in organizational complexity leads to larger PEAD and document that more complicated conglomerates have even greater PEAD. Our results are robust to an extensive list of alternative explanations of PEAD as well as alternative measures of firm complexity. [ABSTRACT FROM AUTHOR]

Due to the increasingly serious environmental pollution, stakeholders are paying more attention on the environmental behavior of enterprises. Our paper investigates how institutional investors affect the quality of corporate environmental information disclosure (EID). Using a sample of A-share listed firms from the heavily polluting industries in China during 2008 to 2016, we conduct correlation analysis, OLS regression, and Tobit regression methods and find that institutional investors' shareholdings are positively correlated with the quality of EID. When institutional investors increase 1% shareholdings of the firm, the EID quality improves by 0.03%. In addition, the high concentration of institutional ownership enhances the impact of institutional investors' shareholdings on the EID quality. But this positive correlation is only observed in companies in regions with a high marketization level. Our paper extends the research on the influential factors of EID and improves the understanding of the impact of institutional investors on corporate environmental behavior. [ABSTRACT FROM AUTHOR]

We systematically examine the relationship between a bank's characteristics and its exposure to systemic risk. We find that tier 1 requirements are negatively associated with a bank's exposure, while size has a positive association. This association is nonlinear because larger banks contribute more than their smaller competitors. Banks with greater financial constraints are less exposed to systemic risk. We find evidence that geographic distance between banks has a negative relationship with systemic risk and that institutional ownership has a positive one. Finally, we find that the risk-taking attributes of the board and the CEO have a positive association with systemic risk. [ABSTRACT FROM AUTHOR]

We examine whether and how options trading activity curtails real activities manipulation. Using a large sample of U.S. firms suspected of earnings manipulation, we document that an active options trading market significantly reduces real activities manipulation. We confirm our findings by using 2SLS analyses and alternative research designs. Our findings are also robust to using alternative proxies for options trading activity. Further, we find that the deterring impact of options trading on real activities manipulation is more pronounced among firms with low institutional ownership, among firms in highly competitive industries, and among small and young firms. Overall, our findings show that an active options market discourages managers from engaging in real activities manipulation, as informed options trading helps stock prices better reflect adverse consequences of real activities manipulation. Our findings highlight the benefits of options market development in reducing value-destroying activities and thus provide policy, practice, and research implications. [ABSTRACT FROM AUTHOR]

Institutional owners frequently invest in a diversified portfolio of firms to avoid firm-specific risks. I investigate the particular scenario in which the institutional owners have shares in both the acquiring and the acquired target firms of an M&A deal. Using a quasi-experimental approach, I find that the acquirer pays less premium and performs better after the M&A effectiveness when the ratio between the value owned by common institutional shareholders in the acquirer and the value held by the same shareholders in the target firm is higher. The value paid is higher, and the performance worsens when this ratio is lower. The results suggest the common institutional owners can obtain benefits from promoting and implementing such M&A deals as a secondary compensation for their lack of control, usually at the expense of the controlling shareholders. [ABSTRACT FROM AUTHOR]

I ask whether corporate communication programs influence shareholder base retention. I use spin-offs to study the communication programs of the spun-off business units that inherit their parent firms' shareholders. Unit firms that initiate a communication program maintain higher levels of post-spin-off institutional ownership and retain more of the inherited institutional shareholder base than firms that do not communicate. An important benefit of communication is that these firms avoid the stock price pressure commonly experienced by unit firms following a sell-off by the inherited institutional shareholder base. This paper extends our understanding of the role of communication in retaining institutional shareholders. [ABSTRACT FROM AUTHOR]

This study investigates firm growth in the Middle East and North African (MENA), a region which is relatively under studied. Our data consists of firms listed on the regional United Arab Emirates (UAE) stock exchanges, which constitute an emerging market with smaller and less developed exchanges than most Western countries. Empirical results reveal that smaller firms grew faster than larger firms with three exceptions. These occurred in energy, telecommunications, and industrial manufacturing sectors, which also exhibit higher firm ownership concentration and significant institutional ownership. In addition, firms with higher ownership concentration also exhibited a cashflow that is statistically significant in increasing firm growth. This finding is consistent with economic theories on the reduced agency costs and higher efficiencies associated with concentrated ownership. These findings contribute to the scholarly literature on growth as they extend the discussion to the drivers of growth in different institutional contexts. Plain English Summary: This study examines the relationship between firm size and growth in the under studied Middle East and North African (MENA) region. Results suggest that similar to previous studies on Western firms, smaller firms grow faster than larger ones in the MENA region, with three notable industry exceptions. Firms in energy, telecommunications, and industrial manufacturing sectors show no clear relationship between size and growth. These industries also exhibit both higher ownership concentration and significant state ownership, which theory suggest may lead to lower agency costs, greater efficiency, and thus higher growth. Findings are significant for research and policy studies on firm growth and suggest that financing and governance structures may play a surprisingly important role in firm growth patterns. [ABSTRACT FROM AUTHOR]

Nonfinancial disclosures of product and business expansion planning occur frequently in practice and are an important vehicle by which managers convey corporate information to outsiders. However, little is known about how the opportunistic incentives of managers affect the choice of such nonfinancial disclosures. This study examines whether managers make their nonfinancial disclosures strategically for self-serving trading incentives. I find strong and robust evidence to suggest that managers manipulate the timing and selectivity of their nonfinancial disclosures in an attempt to maximize trading profits. Specifically, managers tend to disclose bad (good) news on products or business expansion before purchasing (selling) shares. I also find that such strategic behavior is more evident when the expected price impact of the disclosures is greater and when the CEOs are more powerful. However, I do not find evidence that the strategic behavior is weaker for firms with high institutional stock ownership. Overall, my results contribute to understanding managers' strategic use of nonfinancial disclosures in fulfilling personal trading incentives, and should be of interest to boards of directors charged with the responsibility of monitoring and restricting opportunistic managerial disclosures and insider trades. [ABSTRACT FROM AUTHOR]

The paper examines the relationship between corporate governance and dividend payout, using a sample of Indian and US listed firms. In contrast with the substitution hypothesis, but in line with the outcome hypothesis, this study documented that companies with good corporate governance pay higher dividends than companies with weak corporate governance. Specifically, board independence, board size and institutional ownership are the key corporate governance drivers of dividend payout in US firms, while none of the individual corporate governance parameters is significantly associated to dividend payout in for Indian firms. An investor can use this information to make an investment decision. Financial Regulators need to improve corporate governance framework to enhance the disbursement of dividend and mitigate the agency problem. Companies need to consider the signalling effect of dividend payments while framing their dividend policy in both countries. [ABSTRACT FROM AUTHOR]

We investigate the relationship between board diversity (relation-oriented diversity, task-oriented diversity, and overall board diversity) and financial statement comparability. We find that diverse boards are positively associated with financial statement comparability, suggesting that board diversity improves governance mechanisms by alleviating agency conflicts, leading to higher comparability than homogenous boards. We also find that institutional ownership positively affects the association between board diversity and financial statement comparability. Furthermore, the positive effect of diversity, institutional ownership, and comparability are more pronounced in non-state-owned firms and non-crisis periods. Our findings remain consistent with a battery of econometric techniques and measures of comparability. This study provides new insights regarding the role of boardroom diversity in shaping the qualitative aspect of financial reporting, i.e., financial statement comparability. [ABSTRACT FROM AUTHOR]

This work investigates the relationships between institutional ownership, board diversity, and corporate innovation in US-listed firms. Institutional investors play a crucial role in a firm's operation and exert considerable influence on the efficient monitoring of innovative investment. Theory predicts that institutional ownership has a positive effect on innovation investment. However, we find that active institutional investors drove this positive relationship. For those passive institutional investors, this impact is negative. However, a banker on the board can change the effect from negative to positive for passive institutional investors. Firms with female directors, a high presence of audit committee, or a large proportion of ethnic minority directors on board have a significant and positive impact on innovation, including R&D investments and the number of patents. The enactment of Sarbanes–Oxley Act (SOX) in 2002 made information more transparent to investors and narrowed the gap between active and passive institutional investors on innovation. The findings are robust to addressing endogeneity concerns and causal relationships using the IV-2SLS, Difference-in-Differences approaches, and alternative methodology. [ABSTRACT FROM AUTHOR]

This paper aims to analyse the impact of firms' corporate governance characteristics on the degree of first-day returns (i.e., underpricing) in the Italian initial public offering (IPO) market. In particular, this work investigates the impacts of the characteristics of boards of directors (BoDs) and ownership structure on the underpricing of newly offered shares. By studying a sample of 128 Italian IPOs between 2000 and 2016, it is concluded that corporate governance characteristics affect the degree of first-day returns following a company's IPO. More specifically, the size of the BoD negatively affects underpricing, while the ownership of institutional investors and board members has a positive effect on the degree of underpricing. Conversely, no significant evidence is found with regard to board independence, the number of female directors in the boardroom, the implementation of stock option plans and ownership concentration. [ABSTRACT FROM AUTHOR]

The study aims to empirically analyze the effect of board diversity measurement in demographic diversity (i.e., age, gender, and nationality) and cognitive diversity (i.e., education, financial expertise, and tenure) dimensions on the probability of financial distress in an emerging market, China. Additionally, evaluate whether foreign institutional ownership mediates between board diversity and financial distress nexus. Distinctly, the fixed-effects of panel regression method are employed to examine a sample of 13,740 firm-year observations covered from 2009 to 2018. The study reveals that board diversity reduces financial distress likelihood, and foreign institutional ownership mediates this relationship. Further, applied two-stage GMM to resolve the possible endogenous problem, and the robust models also verified the results. First, the study findings contribute particularly in the Chinese context that board diversity is positively associated with financial distress, suggesting that diverse boards are helpful to reduce financial distress likelihood. Second, foreign ownership is attracted through the improved board diversity. Third, foreign ownership has a substantial impact on shaping the board diversity's effect on the likelihood of financial distress. The study findings are novel and imply that firms having diverse boards attract foreign institutional ownership by reducing asymmetric information. Subsequently, foreign institutional investors are helping to reduce financial distress likelihood. [ABSTRACT FROM AUTHOR]

We examine firm disclosure choice when information is received on a real-time, continuous basis. We use transaction-level credit and debit card sales for a sample of retail firms to construct a weekly measure of abnormal revenue for each firm. We validate the informativeness of this abnormal real-time revenue information, confirming its positive correlation with abnormal returns, unexpected revenue realizations, and management revenue forecast news. Using revenue forecasts, we find that firms are less likely to disclose abnormally negative news early in the quarter. As the quarter progresses, firms reduce their withholding of negative news. These results are consistent with impending earnings announcements disciplining managers to provide negative news. This pattern of initial withholding and then disclosure exists primarily in firms with high analyst coverage, high institutional ownership, or high litigation risk. Finally, we find increased insider stock sales in weeks with abnormally negative news and no firm disclosure. Overall, our study provides evidence of the informativeness of real-time information and manager discretion in its release. [ABSTRACT FROM AUTHOR]

Copyright of Journal of International Business Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We show that ownership by institutional investors with increased incentives to monitor decreases the cost of both public and private debt in the REIT industry. Our study focuses on four types of "incentivized" investors: long-horizon institutional investors, public pension funds, institutions with significant portfolio allocations to particular REITs (motivated institutional owners), and institutional investors that specialize in REITs. In addition, we confirm our findings using a composite index that incorporates only that part of incentivized ownership that is free from the effects of total institutional ownership. Finally, we provide evidence that some of the empirical relationships that we observe can be attributed to monitoring effects and cannot be entirely explained by the intentional selection of REITs with low agency risk into institutional portfolios. [ABSTRACT FROM AUTHOR]

The current study examines the association between earnings quality (EQ) and investment efficiency (IE) using the conditional effect of legal origin. Further, we assess the influence of the institutional ownership (IOW) on the relationship between EQ and IE within different legal environments, using a sample of 22,446 firm-year observations from the US, the UK, Germany and Japan over the period of 2001–2018. In general, the results provide cross-country evidence that a higher EQ enhances IE. Further, the results indicate that higher EQ can mitigate overinvestment and underinvestment problems by ensuring that firms move toward their optimal level of investment. In addition, the findings reveal that a country's legal environment affects IE with EQ having a stronger association with IE in common law countries as compared to code law economies. In terms of the conditional role of IOW, the findings illustrate that the effect of IOW on the relationship between EQ and IE varies within different legal origins. The results are robust to alternative measures for the main variables examined. This study provides policy implications for investors, managers, regulators, and theorists about the role of the institutional settings on the relation between certain properties of EQ and IE. [ABSTRACT FROM AUTHOR]

We examine whether a firm's voluntary disclosures, proxied by management earnings forecasts, affect its innovation activity. A firm making more disclosures generates fewer patents and lower-quantity patents. Enactment of SOX is applied as a natural experiment for an exogenous shock to voluntary disclosure. Corporate innovation is reduced for accelerated filers, especially after SOX becomes effective. Nondedicated institutional ownership, R&D spillover, and rival firms' innovation are higher for accelerated filers after SOX. There is more of a negative effect of voluntary disclosure on innovation activity when product markets are highly competitive, industry information diffusion is speedy, and disclosures are more informative. [ABSTRACT FROM AUTHOR]

Copyright of Journal of International Business Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper examines the role of mutual funds in corporate social responsibility (CSR). Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms' CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corporate governance. We further show that while CSR-friendly mutual funds have influence on almost all CSR categories, they focus on increasing CSR strengths rather than reducing CSR concerns. We also discover that CSR-friendly funds are more likely to vote in favor of CSR proposals, and that firms owned by CSR-friendly funds are more likely to link their CEO compensation to CSR outcomes. These results suggest that actively managed mutual funds, which were previously thought to be indifferent (or even detrimental) to social and ethical issues, play a significant role in corporate social outcomes of the firms they invest in. [ABSTRACT FROM AUTHOR]

Using two national culture dimensions, we show that the influence of firms' corporate social performance (CSP) on corporate financial performance (CFP) hinges on culture. Specifically, CFP is higher in those firms where CSR initiatives are congruent with the cultural environment. CSP has a negative impact on CFP for those firms domiciled in countries which are individualistic and favor flexibility. These findings are amplified for those firms with low levels of foreign influence in terms of institutional ownership and sales. Using a dataset covering 5334 firms from 41 different countries, our results indicate that culture and CSR initiatives have a powerful interaction effect in determining CFP, suggesting that CSP's impact is dependent upon the culture of the country where the firm resides. [ABSTRACT FROM AUTHOR]

Taking a strategic fit perspective, we investigate the relationships between task environment (environmental dynamism), institutional environment (state ownership and institutional development), and innovation strategy (cooperative strategy) in the context of China. Using a longitudinal data set of Chinese manufacturing firms from 2012 to 2017, we confirm that environmental dynamism positively drives firms' decisions to cooperate for innovation. This driving effect is stronger for state-owned firms and firms located in regions with limited developed institutions. Overall, no one-size-fits-all innovation strategy exists, and the appropriateness of a strategy depends on the coalignment of a series of external and internal factors. The theoretical and practical implications of this finding are explored. [ABSTRACT FROM AUTHOR]

This research examined whether the beta anomaly exists in the REIT market. By analysing a low-minus-high beta strategy and a betting-against-beta strategy in the REIT market, we find that high-beta REITs earn significantly lower risk-adjusted returns than low-beta REITs. This beta anomaly is only significant in the New REIT Era after 1993. The negative relationship between beta and REIT stock return does not disappear after taking into account some firm characteristics, suggesting that the beta anomaly in the REIT market is not driven by beta's correlation with profitability, asset growth, lottery-like return or the skewness of stock returns. We find that institutional investors, whose portfolios increasingly contain a significant proportion of REITs, prefer the high-beta REITs. The exposure of institutional investors to high-beta REITs could explain the beta anomaly in the REIT market. [ABSTRACT FROM AUTHOR]

We analyze the relationship between institutional investors, innovation and financing constraints. Using the same dataset as Aghion et al. (Am Econ Rev 103(1):277–304, 2013), we find that the effect of institutional ownership on innovation is concentrated in industries with high dependence on external finance and among firms which are a priori likely to be financially constrained. The complementarity between institutional ownership and competition, predicted by the original paper's theory where institutional investors increase innovation through reducing career risks, disappears once this heterogeneity is taken into account. We also provide evidence that the sensitivity of R&D investment to internal funds decreases with institutional ownership. [ABSTRACT FROM AUTHOR]

Risk transfers represent a preferred method for removing pension liabilities from corporate balance sheet. We examine the role of institutional shareholders on firm's decision to offload pension liabilities to professional risk managers. We find that the likelihood of pension risk transfers is higher for firms with higher level of institutional ownership and independent institutional owners. Firms with higher concentration of institutional ownership adopting a passive investment strategy are less likely to complete pension risk transfers. We also document the plan and sponsor-level factors affecting firms' decision to undertake pension risk transfers. [ABSTRACT FROM AUTHOR]

Cross-owners, investors who have stakes in both the acquiring and target firms, are likely to focus on the total portfolio wealth effects from mergers and acquisition transactions, rather than the wealth effects of the target or bidder. Cross-owners may be less concerned with value destroying deals because their lack of gains, or even losses, as ownership in the acquiring firm can be offset by benefits derived from their ownership in the target firm. In contrast, shareholders with no cross-ownership, but own shares in either the target or the acquiring firm only, consider the value prospects for the target, thus producing heterogeneous incentives among shareholders to accept an offer. We investigate this heterogeneity within targets of 481 US negative premium deals and find substantial heterogeneity in acquisition incentives within the target firm shareholder base. Target shareholders in negative premium acquisitions experience negative wealth effects, but institutional cross-owners of negative acquisition premium deals realize positive wealth effects. We also find strong evidence of a size effect, where the observed wealth effects are amplified in larger deals. The divergent interests within the target shareholder base, with the attendant heterogeneous incentives to support deals, limits the monitoring capacity of institutional owners in negative premium deals. [ABSTRACT FROM AUTHOR]

Copyright of Journal of International Business Studies is the property of Springer Nature and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We find evidence that a firm's record earnings influence market response to earnings news. Our results show that the proximity of the firm's earnings to its record earnings leads to investors' underreaction following earnings announcements, exacerbating post-earnings-announcement drift. Such biased behavior is more pronounced in low-growth firms and firms with low institutional ownership. Meanwhile, analysts are not subject to this anchoring bias when a firm's earnings are close to its record earnings. Overall, we find that a firm's record earnings play an important role as an anchor when market participants evaluate the firm's earnings news. [ABSTRACT FROM AUTHOR]

International business scholarship suggests that inward FDI (IFDI) may elicit a wide variety of strategic response from host country firms. While few studies have examined emerging market firms' outward FDI (OFDI) strategy as a response to IFDI by foreign MNCs, no study has examined if and how family firms—a common occurrence in emerging markets—initiate similar response. Drawing on three streams of literature (competitive dynamics of emerging market firms, institutional development, and family firms), this study empirically examines a sample of Indian family firms over a six-year time-period. Results suggest that family firms increase their existing OFDI in response to IFDI announcements by foreign MNCs. Results also demonstrate that the OFDI-growth response varies across firms and is shaped by heterogeneity in management type (professional/family-based), extent of foreign institutional ownership (high/low), and family CEO's international experience (possessed/not possessed). These findings are new to the literature. The study concludes by discussing the theoretical and managerial implications of the findings, and highlighting fertile avenues of future research. [ABSTRACT FROM AUTHOR]

The present study provides empirical evidence on how chief executive officer (CEO) tenure influences the corporate social and environmental disclosures (CS&ED) of all listed non-financial Chinese firms from 2008 to 2016. We used fixed-effect panel data regression model to test our hypothesis. The findings show a negative impact of CEO tenure on CS&ED. Our study provides evidence that CS&ED increases in the early service tenure of CEOs than in their later service periods, as the early increase followed by a decline indicates the presence of non-linear inverted U-shaped association between CEO tenure and disclosure practices. In further analyses, we find that the negative effect of CEO tenure on CS&ED is more pronounced for the firms having a larger number of information intermediaries and independent directors, such as higher level of institutional ownership, analyst's coverage, and more independent directors in a firm. We found the stronger and robust outcomes after controlling the endogeneity problem. In conclusion, this study can be useful for policymakers to link CS&ED with firm economic practices to attain sustainable development goals. Moreover, CS&ED implementation can be an effective means for the managers to mitigate career-concerns. [ABSTRACT FROM AUTHOR]

Building on the premises that institutional ownerships vary in their impact on corporate social responsibility (CSR) decisions and that geographic proximity facilitates the valuation of benefits from CSR, we hypothesize that local long-term institutional ownership is a driver for corporate social performance, in particular positive CSR (CSR strengths). Using a panel data of S&P 500 firms over a 15-year window, we show that long-term institutional ownership that varies in geographic proximity to the focal firm does have a heterogeneous impact on CSR. Whereas both local and non-local long-term institutional ownership has a similar negative effect on CSR concerns, only local long-term institutional ownership has a positive effect on CSR strengths. The positive relation between local long-term institutional ownership and CSR is stronger in firms that are more involved in dealing with soft information which is difficult to quantify from a distance, such as those with high levels of research and development and intangible assets. [ABSTRACT FROM AUTHOR]

We investigate how a firm's decision to hold excessive cash or to overinvest could influence its dividend payout policy in Indonesia. Additionally, we examine the association between corporate ownership structure and cash dividends. Using a data set of Indonesian listed firms for the period from 1995 to 2014, we find that excessive cash holding (overinvestment) positively (negatively) affects a firm's likelihood of paying dividends. Also, we find that family, foreign, state and institutional ownership have significantly negative links with dividends, which suggests the signals of expropriation of firms' wealth by major shareholders. These findings strongly support the expropriation hypothesis that commonly applies to firms with higher level of concentration or to firms in a weak legal environment by which the rights of minority interests are put at risk by large shareholders. [ABSTRACT FROM AUTHOR]

This study investigates how foreign institutional ownership interacts with accounting conservatism in an emerging market setting. We posit that weak investor protection and a high degree of information asymmetry between insiders and outside investors increase demand for conservative reporting in firms operating in emerging markets. Foreign investors in this setting have informational disadvantages relative to their domestic peers and have difficulties in getting access to data. Using a sample of Turkish firms, we find that foreign institutions (particularly foreign corporate investors) demand more conservative reporting in the investee firms. Moreover, we show that this association is more pronounced among firms with greater asymmetric information problems and growth opportunities. Our additional tests reveal that the direction of causality flows from foreign institutional ownership to conservatism, and not vice versa. [ABSTRACT FROM AUTHOR]

Using 13F filings from 1996 to 2011, we document that hedge fund holdings are negatively associated with the subsequent frequency of portfolio firms' voluntary disclosure. This is opposite to the positive association documented in earlier studies for overall institutional ownership as well as for non-hedge fund ownership in our sample. The negative association is more pronounced for hedge fund ownership with short-term investment horizons. Tests using measures of hedge fund influence suggest that hedge fund ownership impacts voluntary disclosure as opposed to hedge funds selecting stocks with subsequent declines in disclosure. We also find that the stocks that decrease their voluntary disclosure subsequent to increases in hedge fund holdings earn positive abnormal returns. Overall, our findings suggest that the impact of hedge funds on firm voluntary disclosure policy differs from that of other institutional investors and potentially contributes to hedge fund profitability. [ABSTRACT FROM AUTHOR]

By analyzing not only an overnight return but also a midday-recess return, namely, a stock return during midday-recess, I analyze whether and why market closures affect cross-sectional stock returns. I find strong persistence in overnight and midday-recess returns, with both returns positively associated with each other. Moreover, these out-of-trading-hours returns are negatively associated with returns during trading hours. I analyze whether these associations are explained by a different investor clientele outside trading hours (the open of the trading session) compared to during trading hours (intraday and closing of the trading session). I find that institutional ownership increases more with returns during trading hours; the finding indicates that those returns are mainly determined by institutional investors, while midday-recess and overnight returns, that is, returns outside trading hours, are not. Overall, my results support the view that market closures do affect cross-sectional returns and the influence is attributable to differences in the investor clientele. [ABSTRACT FROM AUTHOR]

The relation between institutional investors' trading persistence and stock returns is still not clear. Despite the fact that previous studies have demonstrated the persistence of institutional trading can be short-term positively correlated with following stock returns, some empirical studies show that this short-term positive relation holds only under particular circumstances. Recently, Dasgupta et al. (J Finance 66:635–653, 2011) have even found that the persistence of institutional trading is associated with reversals in stock returns. To fill the gap in the literature, I use a unique monthly institutional ownership data to present new empirical evidence showing that institutional trading not only has a short-term positive impact on stock returns but can also have a long-term negative effect. Moreover, I find that stocks with the lower accumulated growth of institutional ownership tend to have greater momentum than stocks with higher such growth. A zero-investment strategy of buying stocks with 'LOW'-decile institutional ownership and selling 'HIGH'-decile ones can outperform the market and generate significant abnormal returns. [ABSTRACT FROM AUTHOR]

Enterprise information systems (EIS) improve access to information, process optimization and system integration. Such enhanced information processing capabilities have varying effects on firm financial performance under different corporate governance aspects. We examine such interacting effects with data of Chinese listed companies during 2008 and 2013. Our empirical study shows that EIS implementation is associated with higher financial performance when the firm's ownership is more concentrated or the CEO assumes a dual role as the chair of the board of directors. EIS implementation is associated with lower financial performance when the firm is a state-owned enterprise or within a business group. This study contributes to literature in IT business value in general and research in enterprise systems in particular by expanding our understandings about the varying impacts of EIS under different corporate governance aspects. [ABSTRACT FROM AUTHOR]

Following the agency theory, this paper contributes to the literature on board independence as a mechanism to mitigate agency costs by investigating the impact of independent minority directors on firm value in a principal-principal setting. Independent minority directors might alleviate agency costs associated to the risk of self-dealing transactions and, in turn, increase firm value. However, since non-controlling shareholders are also self-interested, particularly for firms characterized by strong uncertainty about future financial results and high information asymmetry, independent minority directors might negatively impact firm value by creating frictions within the board, increasing the risks of potential hold-ups by minority shareholders and limiting the ex-ante incentives of the block-holder to undertake profitable idiosyncratic investments. By examining a sample of Italian listed companies, we find some evidence about a positive relationship between the proportion of independent minority directors and firm value. Although weaker, a positive relationship between the proportion of independent minority directors and firm value is also found for firms characterized by high information asymmetry and—therefore—exposed to the risk of opportunistic actions by minority shareholders against the dominant shareholder. Our results shed new light on the relationship between board composition and firm value in a concentrated ownership setting, revealing the role played by independent minority directors in mitigating agency costs. [ABSTRACT FROM AUTHOR]

The empirical evidence from the extant literature has been equivocal regarding the influence exerted by different ownership types on corporate social responsibility (CSR), especially in developing countries such as India characterized by institutional voids. We use a longitudinal panel dataset of 500 large Indian companies to test a model of corporate ownership forms as key determinants of CSR engagement in India. Based on neo-institutional theory, our model of CSR determinants investigates the roles of three salient aspects of ownership namely multinational ownership/affiliation, state ownership and family ownership and control, after controlling for the influence of firm size, firm age, leverage, the availability of slack resources, profitability and various governance attributes. Our ordered logit regressions indicate strong support for the role of multinational ownership and family control and management in promoting higher levels of CSR engagement. Contrary to expectations, public sector ownership appeared to negatively impact CSR engagement. We offer our conjectures on this anomalous finding and the research possibilities it opens up. [ABSTRACT FROM AUTHOR]

Based on prior studies which show that firms headquartered in high religiosity counties exhibit high level of business ethics, this study examines whether these firms are associated with low audit risk, and therefore low audit fees. In investigating this relationship, we draw a distinction between intrinsic and extrinsic religiosity of auditees. Using a sample of 25,872 U.S. observations from 2003 to 2012, we find that intrinsic religiosity of the auditees is associated with low audit fees after controlling for auditee extrinsic religiosity, social capital, firm-specific characteristics, and county-specific characteristics. Furthermore, we find that external monitoring (institutional ownership and leverage) weakens the negative relationship between auditee intrinsic religiosity and audit fees. Finally, we conclude that the effect of auditor religiosity on audit fees is a regional effect that may affect the relationship between audit fees and auditee intrinsic religiosity. [ABSTRACT FROM AUTHOR]

We examine the influence of regulatory guidance and other factors on the green banking disclosure practices of Bangladeshi commercial banks in the period from 2007 to 2014. We find that the issuance of green banking regulatory guidance by the Central Bank of Bangladesh in 2011 positively influences the level of green banking disclosure. We also report that green banking disclosure practices in the banking sector have converged over time and have become a routine process. In addition, we find that corporate governance mechanisms (e.g., board size and institutional ownership) positively affect the level of green banking disclosure. However, our study finds no relationship between the presence of independent directors on the board and green banking disclosure. These results have important implications for the government and other policy-makers. [ABSTRACT FROM AUTHOR]

This study investigates the effect of ownership structure on the use of cash flow in financing corporate investments--the investment-cash flow sensitivity--in a concentrated ownership context. Using a sample of 6797 French listed firms from 2000 to 2013, results show that investment-cash flow sensitivity decreases with the cash-flow rights of the controlling shareholder and increases with the separation of its cash-flow and control rights (excess control rights). Firms are, thus, less likely to use cash flow in investments when the interests of controlling shareholders are aligned with those of minority shareholders. However, they appear to use considerable internal funds for their investments when they have severe agency problems, driven by excess control rights of the controlling shareholders. Overall, our findings help advance the understanding of the role of agency relationship in shaping corporate financial policy. [ABSTRACT FROM AUTHOR]

This study examines the relation between corporate social responsibility (CSR) and institutional investor ownership, and the impact of this relation on stock return volatility. We find that institutional ownership does not strictly increase or decrease in CSR; rather, institutional ownership is a concave function of CSR. This evidence suggests that institutional investors do not see CSR as strictly value-enhancing activities. Institutional investors adjust their percentage of ownership when CSR activities go beyond the perceived optimal level. Employing the path analysis, we also examine the mediating effect of institutional ownership on the relation between CSR and stock return volatility. We find that CSR decreases stock return volatility at a decreasing rate through its effect on institutional ownership. Our results remain robust under several different CSR measures and estimation methods. [ABSTRACT FROM AUTHOR]

The extant literature has examined the effects of ownership structures on corporate social responsibility (CSR), yet it has overlooked the non-linear and interactive effects among major shareholder groups. In this study, we examine the non-linear effects of insider and institutional ownerships on CSR. We also examine whether it is necessary to have both incentive alignment and monitoring mechanisms (complementary view) or it is sufficient to have either mechanism (substitutive view) to promote CSR. Using a sample of the U.S. Fortune 1000 firms, our results suggest that insider and institutional ownerships have non-linear effects on CSR. We also find support for the complementary mechanisms view, in that the highest CSR rating is observed when both ownership levels are high. Therefore, firms need to maintain strong governance structures to realize synergistic effects in promoting CSR. Our findings provide a more in-depth understanding of the relationships between ownership structures and corporate social outcomes. [ABSTRACT FROM AUTHOR]

We examine the relationship between institutional ownership stability and real earnings management. Our findings indicate that firms held by more stable institutional owners experience lower real activities manipulation by limiting overproduction. We further examine how the stability in the shareholdings of pressure-sensitive and insensitive institutional investors affect target firms' use of real earnings management, respectively. Unlike pressure-sensitive institutional investors, the stability in the share ownership of pressure-insensitive institutional investors (i.e., investment advisors, pension funds and endowments) mitigates target firms' use of real earnings management. Overall, our results are consistent with the view that institutional investors presence acts as a monitor on target firms' use of real earnings manipulation activities. [ABSTRACT FROM AUTHOR]

By discriminating between a lazy manager and a career concerns hypothesis, Aghion et al. (Am Econ Rev 103(1):277-304, 2013. doi:) try to disentangle the link between innovation and institutional ownership. Citation-weighted patent counts are used as a proxy for innovation, which motivates the use of count data models. A replication in a narrow sense confirms their empirical results which are mainly based on Poisson models (i.e., with a single set of regression coefficients). However, when extending the model framework by count data hurdle models, it is shown that the two hurdle parts do not coincide-as they should under the Poisson model-but lead to different results. Nevertheless, a remarkably stable positive correlation of citation-weighted patents and institutional ownership across all model specifications can be shown. [ABSTRACT FROM AUTHOR]

Using a sample of Chinese listed firms in the period from 2003 to 2012, this paper empirically investigates how the presence of politically connected directors affects stock price crash risk. We thereby make a distinction between listed state-controlled firms and privately controlled firms due to their different incentives to appoint politicians as directors on the board. Our empirical results show that politically connected directors exacerbate stock price crash risk in listed state-controlled firms, an effect driven by the appointment of local government officials as directors. In contrast, hiring politicians as directors, particularly central-government-affiliated directors, helps listed privately controlled firms to reduce stock price crash risk. Finally, good quality of institutions does not help to alleviate the positive relationship between political connections and stock price crash risk in listed state-controlled firms. However, it does weaken the role of political connections in reducing crash risk in listed privately controlled firms. [ABSTRACT FROM AUTHOR]

The purpose of the this paper is to study the relationship between types of ownership on intellectual capital performance (ICP) and its components in the companies listed in Tehran Stock Exchange. The results show that there is a significant positive relationship between ownership concentration,corporate, institutional ownership and ICP and that state ownership is negatively associated with ICP. Moreover, individual ownership has no significant relationship with ICP. Intellectual capital paradigms require corporate governance members to think holistically about all the intangible resources that can be used to create value through both intra-organizational and extra-organizational relationships. [ABSTRACT FROM AUTHOR]