Foreign institutional investors and the contribution of cash and dividend to firm's value

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saima Karim ◽  
Muhammad Ilyas
Keyword(s):  
Institutional Investors ◽  
Design Methodology ◽  
Stock Exchange ◽  
Cash Holdings ◽  
Agency Cost ◽  
Content Type ◽  
Managerial Agency ◽  
Foreign Institutional Investors ◽  
Nonfinancial Firms

PurposeThe aim of this study is to investigate the effect of foreign institutional investors (FII) on the contribution of cash and dividend to firm's value in the context of Japan.Design/methodology/approachThis study used a sample of 1,929 nonfinancial firms listed in Tokyo Stock Exchange in the period from 2002 to 2016. For data analysis, pooled OLS regression with firm and year fixed effect is applied. Further, the p-value of difference is used to test the null hypothesis of equal coefficients.FindingsThe findings depict that cash holdings contribute more to firm's value when ownership by FII is high. Contrarily, dividends contribute more to firm's value when ownership by FII is low. The results remain consistent after using excess cash holdings instead of cash holdings and after re-estimating the main regression model in the presence of top 30% and bottom 30% ownership level.Research limitations/implicationsThis study is limited to Japanese nonfinancial sector. The results implied that firms where the probability of managerial agency cost and expropriation of cash is high, the presence of FII mitigates the agency cost and positively influences the contribution of cash to firm's value. Overall, this research highlighted the disciplinary and monitoring role of FII in Japan.Originality/valueThis study provides new insights on the monitoring and governance role of foreign institutions, showing that FII promote better cash management and utilization, which significantly affects the contribution of cash holdings to firm's value.

Muddying the waters: when does short selling become market manipulation?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gregory Durston
Keyword(s):  
Design Methodology ◽  
Stock Exchange ◽  
Listed Company ◽  
Short Selling ◽  
Market Manipulation ◽  
London Stock Exchange ◽  
Content Type ◽  
High Court ◽  
Regulatory Actions

Purpose This paper aims to consider “spoofing”, “layering” and “short reports” in the context of market manipulation and, in particular, a recent controversy involving a short-selling attack on a major UK listed company that was considered by the High Court. Design/methodology/approach The very demanding legal and evidential prerequisites and practical difficulties, involved in bringing both criminal and regulatory actions in such cases are identified and discussed, as is the role of the Financial Conduct Authority. Findings These challenges help explain why so few actions of this type are brought. Originality/value This is the first paper to consider the implications of Burford Capital Limited v London Stock Exchange Plc [2020] EWHC 1183 (Comm).

Agency costs, board structure and institutional investors: case of India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pankaj Chaudhary
Keyword(s):  
Institutional Investors ◽  
Harmful Effect ◽  
Agency Cost ◽  
Dynamic Panel Data ◽  
Board Structure ◽  
Coordination Problem ◽  
Board Size ◽  
Content Type ◽  
Agency Issues ◽  
Nonfinancial Firms

PurposeThe author examines the role of board structure and institutional investors in dealing with the agency issues for the Indian firms by taking the data of NSE-500 nonfinancial firms for the period 2010–2019.Design/methodology/approachThe author applies dynamic panel data methodology to deal with endogeneity concerns prevalent in corporate finance variables.FindingsThe agency view is consistent with the board size in the context of India. The author observed that the board size has a harmful effect on agency cost. A larger board size may create a coordination problem, or CEO may find it easy to thrust his or her decisions on board. The author also noticed that firms should have sizeable institutional ownership, particularly pressure-insensitive investors, in equity as they can reduce agency-related issues.Originality/valueThis study focuses on one of the largest emerging economies, i.e. India.

Does Board Composition Matter to Institutional Investors?

2019 ◽  
Vol 18 (2_suppl) ◽  
pp. S238-S266
Author(s):  
Shashank Bansal ◽  
M. Thenmozhi
Keyword(s):  
Institutional Investors ◽  
Natural Experiment ◽  
Stock Exchange ◽  
Agency Cost ◽  
Resource Dependency ◽  
Board Composition ◽  
Board Independence ◽  
Jel Codes ◽  
The Difference

This study examines the resource dependency and signalling role of independent directors from the perspective of institutional investor’s and also investigates if the presence of large blockholder moderates the signalling effect. This study uses the quasi-natural experiment to examine this relationship. The difference-in-difference (DiD) analysis of 5,298 firm observations covering 618 National Stock Exchange (NSE) listed Indian firms for the period 2001–2011 provides empirical evidence that board composition does matter to institutional investors. We find that non-compliant firms who adopted the board independence requirement experience a significant increase in institutional ownership relative to previously compliant firms. We also find that institutional investors have invested more in family-owned firms during post-mandate period compared to government-, private- and foreign-owned firms. Overall, this study contributes to the existing literature on resource dependency theory and signalling theory and shows that the board independence acts as a signal to institutional investors and decreases the agency cost and cost of monitoring. JEL Codes: G3, G11, G34, G38, G23

Tax evasion, firm’s value and governance: evidence from Tunisian Stock Exchange

2020 ◽  
Vol 27 (3) ◽  
pp. 781-799
Author(s):  
Olfa Nafti ◽  
Ines Kateb ◽  
Oumaima Masghouni
Keyword(s):  
Tax Evasion ◽  
Design Methodology ◽  
Stock Exchange ◽  
Moderating Effect ◽  
Family Management ◽  
Data Set ◽  
Content Type ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to analyze the relationship between tax evasion and firm’s value while determining the moderating role of family management and the ownership’s concentration in this relationship. Design/methodology/approach The empirical study employs a Panel Data set of 34 firms listed on the Tunisian Stock Exchange (TSE) for the period 2007 to 2014. Regression analysis is used to estimate the relationships proposed in the hypotheses. Findings The results show that tax evasion has no direct effect on a firm’s value. This study highlighted the presence of a moderating effect of family management on the relationship between tax evasion and firm’s value. However, no moderating effect of the concentration of property on the mentioned relationship was detected. Originality/value This study represents a first empirical essay focusing on the relationship between tax evasion and firm’s value. Furthermore, it analyzes the moderating effect of some aspects of governance, such as family management and ownership’s structure, on this relationship in a Tunisian context.

Corporate governance and cash holdings: the way forward

2018 ◽  
Vol 10 (2) ◽  
pp. 152-170 ◽  
Author(s):  
Tahir Akhtar ◽  
Mohamad Ali Tareq ◽  
Muhammad Rizky Prima Sakti ◽  
Adnan Ahmad Khan
Keyword(s):  
Corporate Governance ◽  
Cash Holdings ◽  
Agency Cost ◽  
Best Interests ◽  
Theoretical Argument ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Developing Markets

Purpose This study aims to provide a review of corporate governance and cash holdings because strong corporate governance is necessary for the efficient utilization of firm’s liquid resources such as cash, to minimize the agency cost of high cash holdings and to improve the value of cash. Design/methodology/approach The authors provide a literature review of corporate governance and cash holdings through a conceptual and theoretical argument rather than empirical research. Findings The authors review an empirical and theoretical work surrounding key corporate governance variables and identify avenues for future research. The authors find that corporate governance mechanisms and cash holdings have received much attention during the past two decades. However, the significant role of corporate governance (both country-level and the firm-level) in controlling the entrenched behaviour of the managers is discussed separately in the literature. The combined effect of both country-level and the firm-level governance is lacking in the cash holdings literature. Additionally, this study has found that much attention is paid to the developed markets, while only a few focused on the developing markets regarding cash holding literature, although the agency problems are high in developing markets. Originality/value The study contributes to the growing literature on corporate governance and cash holdings and provides a further understanding of the role of governance in minimizing the agency cost to increase value by assuring that firms’ assets are used efficiently and productively in the best interests of investors and other stakeholders. In addition, it provides a new idea to the policymaker and future researchers where they need to do more work.

Institutional investors and the value of excess cash holdings: empirical evidence from Pakistan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Ilyas ◽  
Rehman Uddin Mian ◽  
Nabeel Safdar
Keyword(s):  
Institutional Investors ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Cash Holdings ◽  
Institutional Ownership ◽  
High Dimensional ◽  
Content Type ◽  
Listed Firms ◽  
Alternative Measures ◽  
Excess Cash

PurposeThis study examines the effects of foreign and domestic institutional investors on the value of excess cash holdings in the context of Pakistan where the institutional setting is broadly considered as non-friendly to outside shareholders due to family control.Design/methodology/approachA panel sample of 220 listed firms on the Pakistan Stock Exchange (PSX) was employed over the period 2007–2018. Data on institutional ownership are collected from the Standard & Poor’s (S&P) Capital IQ Public Ownership database, while the financial data are collected from Compustat Global. The study uses ordinary least squares (OLS) regression with year and firm fixed effects as the main econometric specification. Moreover, the application of models with alternative measures, high-dimensional fixed effects and two-stage least squares (2SLS) regression are also conducted for robustness.FindingsRobust evidence was found that unlike domestic institutional investors, which do not influence the value of excess cash holdings, foreign institutional investors positively affect the contribution of excess cash holdings to firm value. The positive effect on excess cash holdings' value is mainly driven by foreign institutions domiciled in countries with strong governance and high investor protection. Moreover, this effect is stronger in firms that are less likely to have financial constraints.Originality/valueThis study provides novel evidence on the effect of institutional investors on the value of excess cash holdings in an emerging market like Pakistan. It also adds to the literature by revealing that the effect of different groups of institutional investors on the value of excess cash holdings is not homogenous. The authors employ a panel sample of 220 listed firms on the Pakistan Stock Exchange (PSX) over the period 2007–2018. Data on institutional ownership are collected from the S&P Capital IQ Public Ownership database, while the financial data are collected from Compustat Global. The study uses OLS regression with year and firm fixed effects as the main econometric specification. Moreover, the application of models with alternative measures, high-dimensional fixed effects, and 2SLS regression are also conducted for robustness.

Exploring the relationship between “other block-holders” and the performance of family-controlled corporations in Malaysia

2015 ◽  
Vol 7 (2) ◽  
pp. 117-139
Author(s):  
Sin-Huei Ng
Keyword(s):  
Institutional Investors ◽  
Design Methodology ◽  
Annual Reports ◽  
Content Type ◽  
Corporation Performance ◽  
Foreign Institutional Investors ◽  
Block Holders ◽  
The Government ◽  
The Relationship ◽  
Equity Holdings

Purpose – The purpose of this paper is to provide an exploration on how important are “other block-holders” in explaining the performance of family-controlled corporations in Malaysia. Three important groups of block-holders are identified for the purpose, namely the “foreign institutional investors”, the “domestic institutional investors” and the “government”. Design/methodology/approach – The sample was drawn based on the companies listed on the Main Board of Bursa Malaysia. All the relevant block-holders’ ownership data are hand-collected from the annual reports published by the listed corporations and descriptive statistics together with regression analysis are employed. Findings – Overall it is found that the presence of a second block-holder in family-controlled corporations leads to better performance compared to the corporations where the controlling families act as the sole block-holder. Moreover, this study finds that the identity of the block-holders with the extent of their ownership is important in explaining the performance. Specifically, “foreign institutional investors” and “government” are found to be significant in terms of the extent of their equity holdings and the performance of these corporations, respectively. Conversely, no such relationship is found in the equity holdings of “domestic institutional investors” and the corporation performance. Such finding may imply the possible limited ability and constraints faced by the “domestic institutional investors” in Malaysia to exert effective monitoring and pressure on the management for enhanced corporation performance. Originality/value – Many studies researched the influence of family ownership on the performance of family-controlled corporations but there are limited studies conducted on the influence of “other block-holders” in affecting the performance of these corporations. This paper is an attempt to provide an initial exploration on how important are these “other block-holders” in explaining the performance of these corporations in the context of a small emerging economy, Malaysia.

The purpose of the modern corporation: a holistic view

2020 ◽  
Vol 36 (3) ◽  
pp. 4-7
Author(s):  
John A. Martin ◽  
Frank C. Butler
Keyword(s):  
Institutional Investors ◽  
Design Methodology ◽  
Financial Analysts ◽  
Holistic View ◽  
Content Type ◽  
Modern Corporation ◽  
Stakeholder Model ◽  
Practical Implications

Purpose This paper aims to examine the shareholder versus stakeholder debate. This paper outlines how businesses are starting to move toward a stakeholder model, and also discusses what must be done to sustain the momentum toward the stakeholder model. Design/methodology/approach This paper uses examples from organizations to highlight the momentum toward the stakeholder model. Findings This paper suggests that countervailing forces - from financial analysts, institutional investors, and institutionalized practices in many corporations - will need to be overcome if businesses are to succeed in adopting the stakeholder model. Practical implications Thus paper discusses the role of educators in the process of changing the mindset of students, executives, and others from a shareholder to stakeholder mindset. Originality/value This paper discusses not only the trend toward the stakeholder model of businesses, but also how to sustain the momentum toward this model.

scholarly journals Vulnerable adults in police custody

2019 ◽  
Vol 22 (1) ◽  
pp. 5-8
Author(s):  
Ian Cummins
Keyword(s):  
Design Methodology ◽  
Research Literature ◽  
Police Custody ◽  
England And Wales ◽  
Content Type ◽  
Increased Risk ◽  
Vulnerable Adults

Purpose The purpose of this paper is to discuss the recent National Appropriate Adult Network (NAAN) report on the role of the appropriate adult. Design/methodology/approach This paper is based on the NAAN report and a review of relevant policy and research literature. Findings There to Help 2 highlights that there are still significant gaps in the provision of appropriate adult schemes across England and Wales. These gaps potentially place vulnerable adults at increased risk. Originality/value This paper is a review of recent research.

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