scholarly journals Earnings Forecasts And Institutional Demand For Common Stock

2011 ◽  
Vol 14 (1) ◽  
pp. 57
Author(s):  
Stanley G. Eakins ◽  
Stanley R. Stanswell ◽  
Paul E. Wertheim
Keyword(s):  
Institutional Investors ◽  
Earnings Forecasts ◽  
Institutional Ownership ◽  
Common Stock ◽  
Institutional Investment ◽  
Future Earnings ◽  
Time Period ◽  
Equity Funds ◽  
The Relationship ◽  
Investment Choices

<span>Given that institutional investors now control over 50% of the equity funds in the market, it is important to understand the factors that influence their investment choices. A factor widely believed to influence institutional investment is analysts forecasts of future earnings performance. This paper investigates the ownership vs. earnings relationship using a number of different model specifications. The findings indicate that contrary to the generally accepted wisdom, there is little empirical evidence indicating that institutional investors are influenced by analysts forecasts. Even within the sub-sample of those firms where the analysts are most in agreement, the relationship between the change in institutional ownership and analysts forecasts is insignificant. These results persisted across the six year time period investigated.</span>

scholarly journals Impact of Institutional Investment Pattern on Stock Volatility: A Study of BSE-30 Companies

2016 ◽  
Vol 3 (1) ◽  
Author(s):  
Harendra Singh
Keyword(s):  
Institutional Investors ◽  
Institutional Ownership ◽  
Stock Volatility ◽  
Institutional Investment ◽  
Investment Pattern ◽  
Institutional Holdings ◽  
The Mind ◽  
The Impact

<p>There are many studies found in the field of stock volatility and institutional investors. Most of the studies found an inconsistent relationship between volatility and institutional investors. It creates a curiosity in the mind of investor, whether riskier securities attract institutional investors or an increase in institutional holdings results in an increase in volatility.</p><p><br />In this paper we tried to examine the impact of institutional ownership pattern on stock volatility. We have considered BSE-30 companies and taken 5 year data from 1st January 2009 to 1st January 2014. Our result shows that institutional ownership has positive and significant impact on stock volatility.</p>

Board financial expertise and foreign institutional investment: the moderating role of ownership concentration

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shoukat Ali ◽  
Ramiz Ur Rehman ◽  
Bushra Sarwar ◽  
Ayesha Shoukat ◽  
Muhammad Farooq
Keyword(s):  
Institutional Investors ◽  
Boards Of Directors ◽  
Random Effect ◽  
Ownership Concentration ◽  
Institutional Investment ◽  
Content Type ◽  
Financial Expertise ◽  
Foreign Institutional Investors ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to empirically investigate the impact of board financial expertise on the shareholding of foreign institutional investors in an emerging equity market of China and to explore whether ownership concentration moderates the relationship between board financial expertise and foreign institutional investment. Design/methodology/approach To test the hypothesized relationships, this study uses panel data regression models, i.e. static (fixed effect and random effect) and dynamic (two-step generalized methods of moments) models. Further, to control the possible endogeniety issue, this study uses two instrumental variables, namely, board size and industry average financial expertise of board to proxy board financial expertise. This study covers a period from 2006 to 2015 for 169 listed Chinese firms. Findings The results revealed that foreign institutional investors positively perceived board financial expertise and holds more shareholdings with the increasing level of financial experts at boards of directors. Moreover, ownership concentration positively moderated this relationship. It means that in highly concentrated firms, the board financial expertise conveys a stronger signal to foreign institutional investors that firms can manage financial resources rationally by controlling negative effects of ownership concentration. Further, the robustness model also confirmed the relationship between board financial expertise and foreign institutional shareholdings. Originality/value To the best of authors’ knowledge, this is the first study to investigate board-level financial expertise as a determinant of foreign institutional ownership. Further, no previous study has used ownership concentration as a contextual variable on the relationship between board financial expertise and foreign institutional investment.

scholarly journals Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

2021 ◽  
Author(s):  
Othar Kordsachia ◽  
Maximilian Focke ◽  
Patrick Velte
Keyword(s):  
Institutional Investors ◽  
Environmental Performance ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Research Area ◽  
Business Practices ◽  
Responsible Investment ◽  
Green Business ◽  
The Relationship

AbstractIn light of current climate change discussions, this paper analyzes the effect of ownership structure on a firm’s environmental performance with a subsequent focus on corporate emission reduction. Based on a cross-national European sample consisting of 7384 firm-year observations between 2008 and 2017, this study explores the relationship between sustainable institutional investors and environmental performance. In line with prior research and embedded in an agency theoretical framework, the nature of institutional investors may act as a stimulating driver towards green business practices. Sustainable institutional investors are defined based on their signatory status to the UN Principles for Responsible Investment and their (long-term) investment horizons. The first classification stems from a content-driven sustainability perspective, while the second is derived from temporal sustainability. The results indicate that sustainable institutional ownership is positively associated with a firm’s environmental performance. Further investigations reveal that sustainable institutional investor ownership is also positively associated with firms’ willingness to respond to the Carbon Disclosure Project. These results indicate a higher carbon-risk awareness in firms with greater sustainable institutional investor ownership. Our paper significantly contributes to prior empirical research on institutional ownership and environmental performance and offers useful theoretical and practical implications. It focusses on a still-underdeveloped research area, namely organizations and their relationships with the natural environment, including institutional equity ownership as a driver towards greener practices on a corporate level.

Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India

2020 ◽  
Vol 13 (2) ◽  
pp. 227-252
Author(s):  
Sandeep Yadav
Keyword(s):  
Institutional Investors ◽  
Multinational Firms ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Institutional Ownership ◽  
Risk Behaviour ◽  
The Social ◽  
Corporate Social ◽  
Institutional Owners ◽  
The Relationship

This study fills the gap in the literature by considering the heterogeneous impact of institutional ownership on various dimensions of corporate social performance (CSP). Using the behavioural risk agency perspective, we argue that the risk behaviour of various institutional owners is not the same towards the CSP. We have taken a balanced panel sample of 61 Indian multinational firms for the span of 2013–2018 to test the proposed hypotheses. Results show a negative association of pressure-sensitive institutional investors’ ownership with social and governance dimensions of CSP. Mutual funds ownership is positively associated with the social and governance dimensions of CSP. Foreign institutional investors ownership has no significant impact on CSP. We found that the environmental dimension of CSP is ignored by institutional owners. The moderating effect of firm internationalisation on the relationship between institutional ownership and CSP is also examined.

scholarly journals Are Experienced Analysts More Accurate?

2011 ◽  
Vol 6 (8) ◽  
Author(s):  
Rich Fortin ◽  
James H. Gilkeson ◽  
Stuart E. Michelson
Keyword(s):  
Forecast Error ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Specific Experience ◽  
Experience Levels ◽  
Time Period ◽  
General Experience ◽  
Annual Earnings ◽  
The Relationship ◽  
Analyst Experience

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">We examine the relationship between analyst experience and the accuracy of annual earnings forecasts using a 20-year sample (1983-2002) from the Thomson Financial First Call I/B/E/S database.<span style="mso-spacerun: yes;">&nbsp; </span>We test for this relationship using three different measures of forecast accuracy employed by prior researchers, which are regressed against measures of general experience and specific experience, along with five other controls, for four independent 5-year subperiods, as well as for the full 20-year period.<span style="mso-spacerun: yes;">&nbsp; </span>We find that general experience levels are positively associated with forecast accuracy (negatively associated with forecast error) in most subperiods for two of the three measures of forecast accuracy.<span style="mso-spacerun: yes;">&nbsp; </span>We also find, in contrast with the extant literature, that for two of the three measures of forecast accuracy and for most subperiods, specific experience does not have an association with forecast accuracy beyond that provided by the general experience measure. <span style="mso-spacerun: yes;">&nbsp;</span>Our results suggest that the relationship between forecast accuracy and analyst experience (as well as some other commonly examined analyst characteristics) is dependent on the measure of accuracy employed and the time period studied. </span></span></p>

Determinants of Relative Investor Demand for Common Stocks

1994 ◽  
Vol 9 (3) ◽  
pp. 487-507 ◽  
Author(s):  
William M. Cready
Keyword(s):  
Firm Size ◽  
Institutional Investors ◽  
Information Environment ◽  
Capital Gains ◽  
Common Stock ◽  
Individual Investors ◽  
Dividend Yield ◽  
Common Stocks ◽  
Specific Factors ◽  
Investment Choices

This paper examines the demand for a firm's common stock by wealthy relative to less wealthy individual investors and by individual relative to institutional investors as a function of risk, information environment (proxied by firm size and S&P 500 membership), and form of return payout (i.e., dividends versus capital gains). The findings indicate that among individual investors demand for the stocks of riskier, larger, and low-dividend-yield firms increases with wealth. The findings also suggest that relative to individual investors, institutional investors prefer the stocks of larger firms, S&P 500 firms, and firms paying low dividend yields. Overall, these results suggest that investors find a number of firm-specific factors important in their investment choices and that the importance of such factors varies systematically with investor size.

Do institutional investors stabilize stock returns? Evidence from emerging IPO markets

2020 ◽  
Vol 32 (4) ◽  
pp. 585-600
Author(s):  
Konpanas Dumrongwong
Keyword(s):  
Initial Public Offerings ◽  
Institutional Investors ◽  
Stock Return ◽  
Emerging Market ◽  
Institutional Ownership ◽  
Growth Potential ◽  
Return Volatility ◽  
Content Type ◽  
Stock Return Volatility ◽  
The Relationship

Purpose The purpose of this paper is to investigate how institutional ownership is related to the stock return volatility of initial public offerings (IPOs) in an emerging market and to examine the relationship between institutional ownership and underpricing. Design/methodology/approach This paper investigates these relationships using White’s (1980) regression and 2 × 3 portfolios sorted by firm size and institutional holdings. The regression method examines the relationships across firms with different characteristics such as size, stock price, growth potential, firm age and type of investors. The data were chosen for this sample to cover the new equity issuances listed on the Thailand Stock Exchange for the period 2001–2019. Findings The empirical results suggest that institutional ownership is negatively associated with initial stock return volatility. This highlights the importance of institutional investors in maintaining stability in emerging stock markets. Additionally, it was found that institutional holding and underpricing are negatively correlated. The results are robust after controlling for potential heteroskedasticity and differences in firm characteristics. Originality/value To the best knowledge of the author, this paper is the first to study the relationship between institutional investors and volatility in Thai IPOs, and hence provides a deeper understanding of how investors influence the price formation and volatility of stock prices in emerging markets. Furthermore, besides academics, the results presented in this paper could be useful for market regulators and policymakers in designing future market regulations to efficiently stabilize equity markets.

Institutional Ownership and Dividend Payout in Emerging Markets: Evidence from India

2018 ◽  
Vol 17 (1_suppl) ◽  
pp. S54-S82 ◽  
Author(s):  
Chacko Jacob ◽  
Jijo Lukose P.J.
Keyword(s):  
Institutional Investors ◽  
Positive Relationship ◽  
Institutional Ownership ◽  
Jel Classification ◽  
Large Firms ◽  
Dividend Payout ◽  
Financial Firms ◽  
The Us ◽  
Propensity To Pay ◽  
The Relationship

We examine the relationship between institutional investor ownership and dividend payouts using a large sample of NSE-listed non-financial firms during the period 2001 to 2016. Consistent with the evidence from the US market, institutional investors, on average, have larger holdings in dividend-paying firms and are seen to prefer dividend payers over non-payers among larger firms. However, among smaller firms, institutional investors seem to prefer non-paying firms. Consistent with it, logistic regression results reveal that institutional investors do improve a firms’ propensity to pay dividends, primarily across large firms. Further, among dividend-paying firms, institutional investors, on average, are observed to have relatively lesser holdings in firms with higher payouts than those with lower payouts. In line with these observations, regression analysis also provides no evidence to support a positive relationship between total institutional ownership and payout level. However, across investor categories, we do find evidence for domestic institutional investors (DII) in improving payouts. Further, we use a dynamic panel GMM estimator to correct for endogeneity and find that the relationship is robust among large firms. Our results highlight the role of DII in improving dividend payout and provide support to models that predict a positive relationship. JEL Classification: G23, G32, G34, G35

scholarly journals The effect of institutional ownership on the informativeness of discretionary accruals

2008 ◽  
Vol 6 (1-2) ◽  
pp. 286-291
Author(s):  
David S. Jenkins ◽  
Uma Velury
Keyword(s):  
Information Content ◽  
Private Information ◽  
Institutional Investors ◽  
Institutional Ownership ◽  
Discretionary Accruals ◽  
Sensitivity Test ◽  
Future Earnings

We examine whether the pricing of discretionary accruals is associated with the level of institutional ownership. We posit that if institutional investors monitor their investment actively, then managers would be discouraged from using the discretion in U.S. GAAP to manage earnings and would be encouraged to convey private information which would translate into greater information content. As a sensitivity test, we also examine the relation between discretionary earnings and future earnings. We find that this association is positively related to the level of institutional ownership. Our results collectively support the notion that institutional investors actively monitor their investments and encourage managers to report informative accruals.

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