Emerging Market Makers: The Power of Institutional Investors

2001 ◽  
pp. 74-90 ◽  
Author(s):  
Mary Ann Haley
Keyword(s):  
Institutional Investors ◽  
Emerging Market ◽  
Market Makers

Global Standards and Emerging Markets: The Institutional-Investment Value Chain and the CalPERS Investment Strategy

2005 ◽  
Vol 37 (11) ◽  
pp. 1955-1974 ◽  
Author(s):  
Tessa Hebb ◽  
Dariusz Wójcik
Keyword(s):  
Emerging Markets ◽  
Value Chain ◽  
Institutional Investors ◽  
Capital Investment ◽  
Emerging Market ◽  
Investment Strategy ◽  
Institutional Investment ◽  
Investment Value ◽  
Global Standards ◽  
Anglo American

Institutional investors, particularly pension funds, based in developed Anglo-American capital markets are increasingly investing in international markets, including emerging markets, in an effort to capitalize on the rapid growth rates of these markets. But investment in far-flung jurisdictions carries with it risk and uncertainty, particularly when the corporate standards of firms in emerging markets are below those found in these investors' home countries. In order to mitigate the risks posed by poor corporate standards of behaviour, institutional investors increasingly apply nonfinancial criteria not only to individual firms in emerging markets, but to the corporate practices of whole countries. Though countries and their regulatory regimes are central to external capital-investment decisions, we find convergence to global standards occurs when key actors in the investment value chain demand levels of corporate and social behavior greater than those currently consistent with countries' own regulatory frameworks. We test this hypothesis using the decision of the California Public Employees Retirement System to screen out several emerging-market countries from their investment portfolio on the basis of a variety of nonfinancial criteria.

Institutional investors’ investment preference and monitoring: evidence from Malaysia

2019 ◽  
Vol 45 (9) ◽  
pp. 1327-1346
Author(s):  
Chwee Ming Tee
Keyword(s):  
Firm Performance ◽  
Institutional Investors ◽  
Capital Expenditure ◽  
Emerging Market ◽  
Firm Valuation ◽  
Profit Margin ◽  
Institutional Setting ◽  
Content Type ◽  
Net Profit ◽  
Different Types

Purpose The purpose of this paper is to examine the investment preference of various types of institutional investors in Malaysia, and its influence on firm valuation, operating performance and capital expenditure. Design/methodology/approach This study employs ordinary least squares model to examine: investment preference according to different types of institutional investors; the association between various types of institutional investors and firm valuation; the association between various types of institutional investors and firm performance; and the association between various types of institutional investors and capital expenditure. Findings The result shows that different types of institutional investors exhibit different investment preference. From the domiciles perspective, local institutional investors (LII) are found to be associated with higher Tobin’s Q, ROA and net profit margin. When viewed from business relationship perspective, “pressure-resistant” institutional investors (PRII) are positively associated with Tobin’s Q, ROA and net profit margin. Both LII and PRII are also associated with higher capital expenditure. Originality/value This study reveals the investment preferences of various types of institutional investors in an emerging market economy. The results show that institutional monitoring is associated with higher firm valuation, higher firm performance and higher capital expenditure. However, the effect is largely driven by local and PRII, particularly government-controlled institutional funds. These evidence suggest that different firm outcomes between emerging and advanced economy can be explained by variation in institutional setting.

scholarly journals Herding Behavior of Institutional Investors in Romania. An Empirical Analysis

2017 ◽  
Vol 10 (2) ◽  
pp. 115-130
Author(s):  
Mihaela Brodocianu ◽  
Ovidiu Stoica
Keyword(s):  
Insider Trading ◽  
Institutional Investors ◽  
Stock Prices ◽  
Stock Exchange ◽  
Listed Company ◽  
Emerging Market ◽  
Herding Behavior ◽  
Stock Return Volatility ◽  
Emerging Stock Markets ◽  
The Status

AbstractDuring the last decades, institutional investors have been the main players, both in developed as well as in emerging stock markets. Thus, their investment behavior was analyzed at the national or international level, in order to assess if institutional investors herd, increase stock return volatility, affect market efficiency and liquidity, influence the corporate governance, or destabilize stock prices. This paper studies the behavior of the institutional investors on the Romanian stock market, a European frontier market that struggles to attain the status of emerging market. We examine if the disclosure level generates any herding behavior for institutional investors. In emerging markets, the lack of transparency affects the degree of investments in a listed company, as long as insider trading is pushed to the limit of the legal line. For this study, we used financial information from the companies listed on the Bucharest Stock Exchange for the period 2010-2014. The findings highlight that there is a certain herding behavior among institutional investors in Romania.

scholarly journals Corporate governance, institutional investor type and firm performance: Evidence from an emerging market

2021 ◽  
Vol 5 (4) ◽  
pp. 20-27
Author(s):  
Rama Sastry Vinjamury
Keyword(s):  
Firm Performance ◽  
Institutional Investors ◽  
Firm Value ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Emerging Market ◽  
Developed Economies ◽  
Financial Firms ◽  
Pressure Sensitive

The study analyses the role of institutional investors in improving firm performance. Unlike in developed economies where firm ownership is widely dispersed, firms in emerging economies such as India have substantial promoter shareholdings (often in a majority or close to a majority). Given the promoter control of Indian companies, the role of institutional investors as external monitors is analysed. Following Brickley, Lease, and Smith (1988) and Almazan, Hartzell, and Starks (2005), the study categorises institutional investors as pressure-sensitive and pressure-insensitive institutional investors. Panel data for non-financial firms from India included in National Stock Exchange (NSE) 500 over the period 2008–2017 is studied using fixed-effects models. The study finds that the increased ownership of pressure-insensitive institutional investors is positively associated with firm performance. Also, the increased ownership of pressure-sensitive institutional investors is negatively associated with firm performance. These findings are consistent with the view that pressure-insensitive institutional investors are more effective monitors compared to pressure-sensitive institutional investors. The study offers insights into the role of institutional investors in economies where firms have a substantial promoter shareholding. The study documents that even with a substantial promoter shareholding and control, pressure-insensitive institutional investors aid in enhancing firm value

scholarly journals Institutional investors’ response to improved corporate governance: Evidence from the brazilian capital market

2018 ◽  
Vol 64 (4) ◽  
pp. 135
Author(s):  
Eduardo Schiehll ◽  
Melissa Gerhard ◽  
Clea Beatriz Macagnan
Keyword(s):  
Corporate Governance ◽  
Capital Market ◽  
Institutional Investors ◽  
Stock Exchange ◽  
Emerging Market ◽  
Agency Cost ◽  
Data Set ◽  
Listed Firms ◽  
Internal Governance Mechanisms ◽  
Governance Quality

<p>This study examines whether normative pressures from stock market regulators to improve the governance quality of Brazilian listed firms influence the participation and activism of institutional investors. More specifically, we investigate the association between institutional investor’s ownership and firm’s voluntary adhesion to the São Paulo Stock Exchange (B3) differentiated levels of corporate governance quality. Empirical testing is performed on a ten-year (2002–2011) panel data set from a sample of 439 firms listed on the B3. Our findings suggest that firms in differentiated corporate governance levels, that is, with better level of transparency and commitment to monitoring, are more attractive to institutional investors. We interpret this result as evidence supporting the shareholder activism movement, attributed by several scholars to institutional shareholders. Our study contributes to the governance literature on the firm’s response to normative pressures and the ability of internal governance mechanisms to signal lower agency cost to capital market. Our evidence also contributes to the ongoing discussion about the role and influence of institutional investors in the functioning of capital markets, and more specific in emerging market like Brazil.</p>

Do behavioral biases differ among institutional and individual investors?

2021 ◽  
pp. 61-73
Author(s):  
Roshani Chamalka Gunathilaka ◽  
◽  
J. M. Ruwani Fernando ◽  
Keyword(s):  
Decision Making ◽  
Institutional Investors ◽  
Emerging Market ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Disposition Effect ◽  
Individual Investors ◽  
Behavioral Biases ◽  
The Individual ◽  
Overconfidence Bias

Purpose: The purpose of this paper is to investigate how does the behavioral biases differ among the individual and institutional investors based on Colombo Stock Exchange. The study considers the effect of four behavioral biases; overconfidence bias, representativeness bias, disposition effect and herd mentality bias on the financial investment decision making of individual investors and institutional investors. Design / methodology / approach: A questionnaire was utilized to collect the data and the final sample consisted with 104 individual and 71 institutional respondents. The data of 175 investors was analyzed by using Partial Least Square-Structural Equation Modeling approach. Findings: The study revealed that disposition effect make an impact on the investment decisions of both individual investors and institutional investors whereas overconfidence bias has impact only on the individual investors’ investment decisions. Originality: This study is one of the pioneering studies examining the behavioral biases differences of individual and institutional investors’ decision making. Thus, this study expands the existing literature in the field of behavioral finance particularly in emerging market context. In this sense, the findings of this study could draw important inferences for researchers, investors and policy makers to ensure that they make rational investments decisions.

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