Institutional ownership and performance: An Overview in emerging and developed countries.
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2016-12-21
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en
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Abstract
This paper verifies the effect of the institutional ownership on the company´s performance and whether this effect is higher in emerging countries with civil law system compared to developed countries with common law system. This paper uses a sample of 97 firms from emerging and developed countries and employ a linear regression with robust standard errors to find that there is a negative and significant relationship between institutional ownership on the company´s performance. Moreover, this paper also found that the effect the institutional ownership structure on the company performance is not significantly higher in emerging countries with civil law system compared to developed countries with common law system. The empirical results of this paper suggest that institutional ownership is not always endogenous when shareholders are large institutions. Additionally, this study confirms the findings of a body of researchers which claim that institutional ownership can negatively and significantly affects company´s performance. Lastly, there is an indication by the literature and results that the effect of institutional ownership on company´s performance will be nullified when the governance indicator together with the legal system are either extremely weak or strong to allow for any potential benefit provided by institutional ownership.
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Faculteit der Managementwetenschappen