How Do Foreign Institutional Investors Enhance Firm Innovation
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How Do Foreign Institutional Investors Enhance Firm Innovation
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Author : Hoang Luong
language : en
Publisher:
Release Date : 2017
How Do Foreign Institutional Investors Enhance Firm Innovation written by Hoang Luong and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
We examine the effect of foreign institutional investors on firm innovation. Using firm-level data across 26 non-U.S. economies between 2000 and 2010, we show that foreign institutional ownership has a positive, causal effect on firm innovation. We further explore three possible underlying mechanisms through which foreign institutions affect firm innovation: foreign institutions act as active monitors, provide insurance for firm managers against innovation failures, and promote knowledge spillovers from high-innovation economies. Our paper sheds new light on the real effects of foreign institutions on firm innovation.
Three Essays On Institutional Investment
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Author : Nida Abdioglu
language : en
Publisher:
Release Date : 2012
Three Essays On Institutional Investment written by Nida Abdioglu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
This thesis investigates the investment preferences of institutional investors in the United States (US). In the second chapter, I analyse the impact of both firm and country-level determinants of foreign institutional investment. I find that the governance quality in a foreign institutional investor's (FII) home country is a determinant of their decision to invest in the US market. My findings indicate that investors who come from countries with governance setups similar to that of the US invest more in the United States. The investment levels though, are more pronounced for countries with governance setups just below that of the US. My results are consistent with both the 'flight to quality' and 'familiarity' arguments, and help reconcile prior contradictory empirical evidence. At the firm level, I present unequivocal evidence in favour of the familiarity argument. FII domiciled in countries with high governance quality prefer to invest in US firms with high corporate governance quality. In the third chapter, I investigate the impact of the Sarbanes-Oxley Act (SOX) on foreign institutional investment in the United States. I find that, post-SOX, FII increase their equity holdings in US listed firms. This result is mainly driven by passive, non-monitoring FII, who have the most to gain from the SOX-led reduction in firm information asymmetry, and the consequent reduction in the value of private information. The enactment of SOX appears to have changed the firm-level investment preferences of FII towards firms that would not be their traditional investment targets based on prudent man rules, e.g., smaller and riskier firms. In contrast to the extant literature, which mostly documents a negative SOX effect for the US markets, my chapter provides evidence of a positive SOX effect, namely the increase in foreign investment. In the fourth chapter, I examine the effect of SOX on the relation between firm innovation and institutional ownership. I find that US firms investing in innovation attract more institutional capital post-SOX. Prior literature highlights two SOX effects that could cause this result: a decreased level of information asymmetry (direct effect) and increased market liquidity (indirect effect). My findings support the direct effect, as I find that the positive relation between innovation and institutional ownership is driven by passive and dedicated institutional investors. A reduction in firms' information asymmetry is beneficial for these investors while they gain less from increased market liquidity. Overall, my results indicate that SOX is an important policy that has strengthened the institutional investor's support for firm innovation.
The Effect Of Foreign Institutional Investors On Corporate Governance
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Author : Matteo Cecchi
language : en
Publisher:
Release Date : 2019
The Effect Of Foreign Institutional Investors On Corporate Governance written by Matteo Cecchi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Compared to the astonishing growth of the Chinese economy in the last 40 years, the development of its capital markets has been lagging behind. Now that the economic system is transforming from an export-based and investment-driven model to a consumption-based and innovation-driven one, an efficient stock market has never been more relevant. To promote the development of the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE), the China Securities Regulatory Commission (CSRC) has implemented a range of new policies in the last decade. One of these policies aims at increasing the presence of foreign institutional investors. The objective of this thesis is therefore to analyse if the new influx of foreign investors have performed a monitoring role and improved firm-level corporate governance structures. More specifically, we hypothesise that larger and long-term foreign institutional investments drive corporate governance improvements. We have collected an extensive foreign ownership database and used multiple metrics to measure firm-level corporate governance. Namely, we use a corporate governance index, a transparency disclosure rating, and individual corporate governance attributes. In order to alleviate endogeneity concerns, we performed a variety of empirical tests, such as analysing the effect of lagged, significant changes in foreign ownership on the level of corporate governance. We indeed found that foreign institutional investors have enhanced the development of corporate governance mechanisms in Chinese publicly listed firms. Therefore, our results indicate that further relaxations in foreign ownership restrictions will hasten the development of the Chinese capital markets.
Portfolio Preferences Of Foreign Institutional Investors
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Author : Reena Aggarwal
language : en
Publisher: World Bank Publications
Release Date : 2003
Portfolio Preferences Of Foreign Institutional Investors written by Reena Aggarwal and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Foreign exchange categories.
Firm Innovation And Institutional Investment
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Author : Nida Abdioglu
language : en
Publisher:
Release Date : 2013
Firm Innovation And Institutional Investment written by Nida Abdioglu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This paper investigates the effect of the Sarbanes-Oxley Act (SOX) on the relation between institutional ownership (IO) and firm innovation. We find that US firms investing in innovation attract more institutional capital post-SOX. Prior literature identifies two SOX effects on the average US firm that could drive this relation, that is, a decreased level of information asymmetry (direct effect) and the consequent increased market liquidity (indirect effect). Our findings overwhelmingly support the direct effect. In particular, we find that the positive relation between IO and innovation post-SOX is mainly driven by passive and dedicated institutional investors. These investors benefit greatly from a reduction in the firm's information asymmetry but receive little gain from improvements in market liquidity, given their long-term trading horizon. Our results are robust to different model specifications, including difference-in-differences tests, which alleviate concerns about the impact of confounding effects to our conclusions. Taken together, our findings indicate an important policy effect of SOX, namely, the strengthening of institutional investor support for firm innovation.
A History Of Corporate Governance Around The World
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Author : Randall K. Morck
language : en
Publisher: University of Chicago Press
Release Date : 2007-11-01
A History Of Corporate Governance Around The World written by Randall K. Morck and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-11-01 with Business & Economics categories.
For many Americans, capitalism is a dynamic engine of prosperity that rewards the bold, the daring, and the hardworking. But to many outside the United States, capitalism seems like an initiative that serves only to concentrate power and wealth in the hands of a few hereditary oligarchies. As A History of Corporate Governance around the World shows, neither conception is wrong. In this volume, some of the brightest minds in the field of economics present new empirical research that suggests that each side of the debate has something to offer the other. Free enterprise and well-developed financial systems are proven to produce growth in those countries that have them. But research also suggests that in some other capitalist countries, arrangements truly do concentrate corporate ownership in the hands of a few wealthy families. A History of Corporate Governance around the World provides historical studies of the patterns of corporate governance in several countries-including the large industrial economies of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; larger developing economies like China and India; and alternative models like those of the Netherlands and Sweden.
Corporate Governance Strengthening Latin American Corporate Governance The Role Of Institutional Investors
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Author : OECD
language : en
Publisher: OECD Publishing
Release Date : 2011-07-01
Corporate Governance Strengthening Latin American Corporate Governance The Role Of Institutional Investors written by OECD and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-07-01 with categories.
This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance.
Foreign Institutional Investment Horizon And Investment Efficiency In Emerging Markets
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Author : Rehman Uddin Mian
language : en
Publisher:
Release Date : 2023
Foreign Institutional Investment Horizon And Investment Efficiency In Emerging Markets written by Rehman Uddin Mian and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
This paper examines whether foreign institutional investors' investment horizon affects investment efficiency across 17 emerging markets. Using a sample of 10,360 firms, we find that long-term foreign institutional investors are associated with an enhancement in investment efficiency, particularly in firms susceptible to overinvestment and agency problems. We also show that the proximity advantage of local institutional investors in monitoring investment decisions does not extend to foreign institutional investors with a longer investment horizon in emerging countries.
Institutional Investors In Global Capital Markets
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Author : Narjess Boubakri
language : en
Publisher: Emerald Group Publishing
Release Date : 2011-09-27
Institutional Investors In Global Capital Markets written by Narjess Boubakri and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-09-27 with Business & Economics categories.
Examines various issues concerning the strategies of institutional investors, the role of institutional investors in corporate governance, their impact on local and international capital markets, as well as the emergence of sovereign and other asset management funds and their interactions with micro and macro economic and market environments.
Esg And Responsible Institutional Investing Around The World A Critical Review
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Author : Pedro Matos
language : en
Publisher: CFA Institute Research Foundation
Release Date : 2020-05-29
Esg And Responsible Institutional Investing Around The World A Critical Review written by Pedro Matos and has been published by CFA Institute Research Foundation this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-05-29 with Business & Economics categories.
This survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing. While there is no consensus on the exact list of ESG issues, responsible investors increasingly assess stocks in their portfolios based on nonfinancial data on environmental impact (e.g., carbon emissions), social impact (e.g., employee satisfaction), and governance attributes (e.g., board structure). The objective is to reduce exposure to investments that pose greater ESG risks or to influence companies to become more sustainable. One active area of research at present involves assessing portfolio risk exposure to climate change. This literature review focuses on institutional investors, which have grown in importance such that they have now become the largest holders of shares in public companies globally. Historically, institutional investors tended to concentrate their ESG efforts mostly on corporate governance (the “G” in ESG). These efforts included seeking to eliminate provisions that restrict shareholder rights and enhance managerial power, such as staggered boards, supermajority rules, golden parachutes, and poison pills. Highlights from this section: · There is no consensus on the exact list of ESG issues and their materiality. · The ESG issue that gets the most attention from institutional investors is climate change, in particular their portfolio companies’ exposure to carbon risk and “stranded assets.” · Investors should be positioning themselves for increased regulation, with the regulatory agenda being more ambitious in the European Union than in the United States. Readers might come away from this survey skeptical about the potential for ESG investing to affect positive change. I prefer to characterize the current state of the literature as having a “healthy dose of skepticism,” with much more remaining to be explored. Here, I hope the reader comes away with a call to action. For the industry practitioner, I believe that the investment industry should strive to achieve positive societal goals. CFA Institute provides an exemplary case in its Future of Finance series (www.cfainstitute.org/research/future-finance). For the academic community, I suggest we ramp up research aimed at tackling some of the open questions around the pressing societal goals of ESG investing. I am optimistic that practitioners and academics will identify meaningful ways to better harness the power of global financial markets for addressing the pressing ESG issues facing our society.