Three Essays On Institutional Investors
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Three Essays On Institutional Investors
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Author : Ligang Zhong
language : en
Publisher:
Release Date : 2012
Three Essays On Institutional Investors written by Ligang Zhong 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.
In this dissertation, I investigate the impact of institutional investors on security prices and corporate policies, and offer a new perspective on the vital role that institutional investors play in the modern capital market. Specifically, on the impact on security price movements, I design a new measure of stock-level sentiment based on mutual fund publically disclosed portfolio information and provide a new dimension to better predict stock returns. A trading strategy based on the new sentiment metrics can generate an annualized alpha of 21.27%. The abnormal returns cannot be explained by the time-varying expected returns and transaction costs, and can be best explained by mutual fund overreactions. Hence, my findings can be interpreted as a new anomaly in a new era-when institutional investors are the marginal traders. On the impact on corporate policy side, I document two pieces of new empirical evidence on the importance of long-term institutional holdings: the entrenchment effect of long-term institutional holdings in the context of corporate financing decisions and the active monitoring role of long-term institutional investors in the context of international firms' accounting qualities. Combined with previous studies which favour a long-term institutional investor, the evidence on the cost side of long-term holding I document here can serve as the first call for an optimal investment horizon for firms operating in the U.S.
Three Essays On Institutional Investors And Firms Characteristics
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Author : Farid Radmehr
language : en
Publisher:
Release Date : 2019
Three Essays On Institutional Investors And Firms Characteristics written by Farid Radmehr 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.
Three Essays On Information Production And Monitoring Role Of Institutional Investors
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Author : Xiaorong Ma
language : en
Publisher:
Release Date : 2017-01-26
Three Essays On Information Production And Monitoring Role Of Institutional Investors written by Xiaorong Ma and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-26 with categories.
This dissertation, "Three Essays on Information Production and Monitoring Role of Institutional Investors" by Xiaorong, Ma, 马笑蓉, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This thesis includes one essay about the information production of institutional investors and two essays about the monitoring role of institutional investors. The first essay empirically examines the association between investor base and information production in the context of stock splits. Using the proportion of 13F filers as the proxy for the size of investor base, we show that three proxies for stock price informativeness, adjusted probability of information-based trading (AdjPIN), price non-synchronicity and probability of information-based trading (PIN), decrease significantly due to enlarged investor base after stock splits. It suggests that institutional investors are less incentivized to gather firm specific information when firm''s investor base expands, which is consistent with the "risk sharing hypothesis," proposed by Peress (2010). Furthermore, we find that the change of the price informativeness around splits is negatively related to the magnitude of positive return drifts following splits. This result is consistent with the notion that less information incorporated in stock prices results in a sluggish response by the market to corporate event. The second essay empirically identifies an external corporate governance mechanism through which the institutional trading improves firm value and disciplines managers from conducting value-destroying behaviors. We propose a reward-punishment intensity (RPI) measure based on institutional investors'' absolute position changes, and find it is positively associated with firm''s subsequent Tobin''s Q. Importantly, we find that firms with higher RPI exhibit less subsequent empire building and earnings management. It suggests that the improved firm values can be attributed to the discipline effect of institutional trading on managers, which is in line with the argument of "Governance Through Trading." Furthermore, we find that the exogenous liquidity shock of decimalization augments the governance effect of institutional trading. We also find that the discipline effect is more pronounced for firms with lower institutional ownership concentration, higher stock liquidity, and higher managers'' wealth-performance sensitivity, which further supports the notion that institutional trading could exert discipline on a manager. The third essay focuses on a particular type of institutional investor, short sellers, and explores the discipline effect of short selling on managerial empire building. Employing short-selling data from 2002-2012, we find a significantly negative association between the lending supply in the short-selling market and the subsequent abnormal capital investment. Besides, we find a positively significant association between the lending supply and the mergers and acquisitions announcement returns of acquiring firms. These results suggest that the short-selling potential could deter managers from conducting over-investment and value-destroying acquisitions. In addition, the discipline effect is stronger for firms with higher managers'' wealth-performance-sensitivity, for firms with lower financial constraints, and for stock-financed acquisition deals. Finally, firms with higher lending supply also have higher Tobin''s Q in the subsequent year. These results indicate that short-selling is another important external governance force. DOI: 10.5353/th_b5066226 Subjects: Institutional i
The Behavior Of Institutional Investors
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Author : Alexander Pütz
language : en
Publisher:
Release Date : 2012
The Behavior Of Institutional Investors written by Alexander Pütz and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Index mutual funds categories.
Institutional investors such as mutual funds and hedge funds play an important role in today's financial markets. This thesis consists of three essays which empirically study the behavior of active fund managers. In particular, the first essay investigates whether managers behave rationally or if some of them unconsciously make wrong investment decisions due to behavioral biases. The second essay examines whether some managers intentionally act to solely advance their own interests by strategically valuing the security positions in their portfolio. The third essay analyzes what the managers' education reveals about their investment behavior.
Three Essays On Institutional Investors Holding And Trading Activities
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Author : Zhenzhen Sun
language : en
Publisher:
Release Date : 2010
Three Essays On Institutional Investors Holding And Trading Activities written by Zhenzhen Sun and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Corporate bonds categories.
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.
Three Essays On Institutional Investors And Income Taxes
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Author : Spencer Conley Usrey
language : en
Publisher:
Release Date : 2009
Three Essays On Institutional Investors And Income Taxes written by Spencer Conley Usrey and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Electronic dissertations categories.
This dissertation investigates the role of institutional investors in capital market tax studies. Specifically, this studies examines how institutional investors influence firms' cost of capital and financing decisions following changes in personal tax rates on debt and equity income. The dissertation is organized into three essays that examine these topics. The first two essays examine tax rate changes in 1997 and 2003 that reduced the personal tax rates on interest, capital gains and dividends. Essay 3 summarizes relevant literature involving institutional investors and capital market tax studies. Essay 1 investigates whether differences between the tax liabilities of the underlying shareholders of institutional investors affect firms' capital structures and decisions to issue debt versus equity following changes in tax rates on investment income received by individuals. The study predicts that firms with high concentrations of tax disadvantaged institutional investors (institutions whose underlying shareholders are taxable) will issue more equity relative to debt than those with high concentrations of tax-advantaged institutional investors (institutions whose underlying shareholders are not taxable). The results find that the financing decisions of firms with high levels of tax-disadvantaged institutional investors are influenced by changes in individual tax rates. Essay 2 investigates whether differences in the tax attributes of the underlying shareholders of institutional investors influences the impact of equity tax rate changes on a firm's cost of equity. The study examines a sample period of two years (eight quarters) around the enactment of the 1997 and 2003 Acts. The study finds that firms with high levels of tax-disadvantaged ownership experienced a decrease in their cost of equity capital following a decrease in the individual tax rate on capital gains. In addition, the interaction of the institutional investor dummy variable and a dummy variable indicating the observation is after the 2003 Act indicates that the cost of equity capital for firms with high levels of tax-disadvantaged ownership decreased following the 2003 Act. The results of Essays 1 and 2 provide evidence that institutional investors are not homogeneous with respect to their influence on firms' cost of capital and financing decisions following changes in individual tax rates.
Three Essays On Financial Markets And Institutional Investors
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Author : Blake Phillips
language : en
Publisher:
Release Date : 2009
Three Essays On Financial Markets And Institutional Investors written by Blake Phillips and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Investment analysis categories.
Three Essays In Corporate Finance And Institutional Investors
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Author : Jiekun Huang
language : en
Publisher:
Release Date : 2009
Three Essays In Corporate Finance And Institutional Investors written by Jiekun Huang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
Three Essays On Institutional Investors And Corporate Governance
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Author : Rasha Ashraf
language : en
Publisher:
Release Date : 2007
Three Essays On Institutional Investors And Corporate Governance written by Rasha Ashraf and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Antitakeover strategies categories.
The first essay analyzes mutual funds' proxy voting records on shareholder proposals. The results indicate that mutual funds support shareholder proposals and vote against management for proposals that are likely to increase shareholders' wealth and rights, in firms with weaker external monitoring mechanisms, in firms with entrenched management, and when funds have longer investment horizon. Mutual funds mostly take management sides on executive compensation related proposals, when they have higher ownership concentration, and when they belong to bigger fund families. The results further indicate that there is a positive reputational effect for the funds undertaking a monitoring role. Moreover, mutual funds reduce holdings when they disapprove of managements' policy, but before doing so they take on an activist role by supporting shareholder proposals. The second essay investigates institutional investors' trading behavior of acquiring firm stocks surrounding merger activities. We label investment companies and independent investment advisors as active institutions and banks, nonbank trusts and insurance companies as passive institutions. We find active institutions increase holdings of acquiring firm stocks for mergers with higher wealth implications. However, active institutions overreact to stock mergers at the announcement, which they appear to correct at the resolution quarter of the merger. The trading behavior of passive institutions suggests that these institutions disregard the market response of merger announcement in trading acquiring firm stocks at the announcement quarter. The passive institutions gradually update their beliefs and trade on the basis of merger wealth effect at the resolution quarter. The third essay examines relation between executive compensation structure with the existing level and changes of takeover defense mechanisms of firms. According to "managerial entrenchment hypothesis," higher managerial power from adoption of takeover defense mechanisms would lead to generating higher rents for executives. "Efficient contracting hypothesis" argue that higher anti-takeover provisions would contribute in achieving efficient contracting by deferring compensation into the future due to the low possibility of hostile takeover. The results support managerial entrenchment hypothesis with regard to existing level of takeover defense mechanisms. With regard to changes in anti-takeover provisions, the existing level of managerial power influence the future pay structure.