scholarly journals Does Board Diversity Attract Foreign Institutional Ownership? Insights from the Chinese Equity Market

2021 ◽  
Vol 14 (11) ◽  
pp. 507
Author(s):  
Shoukat Ali ◽  
Ramiz Ur Rehman ◽  
Muhammad Ishfaq Ahmad ◽  
Joe Ueng
Keyword(s):  
Institutional Investors ◽  
Emerging Market ◽  
Institutional Ownership ◽  
Fixed Effect Model ◽  
Board Diversity ◽  
Financial Expertise ◽  
Foreign Institutional Investors ◽  
Variable Bias ◽  
The Impact ◽  
Nonfinancial Firms

The study aimed to empirically investigate the impact of board diversity variables (age, gender, nationality, education, tenure, and expertise) on the investment preferences of foreign institutional investors in an emerging market, China. For this, sample data consisted of 1374 nonfinancial Chinese firms from 2009 to 2018. The study used OLS regression as a baseline regression, a fixed effect model to control omitted variable bias, and the two-step systems GMM model to control the endogeneity problem. The study revealed that board diversity variables (gender, nationality, education, and financial expertise) are positively associated with foreign institutional ownership in Chinese nonfinancial firms, implying that foreign institutional investors own a high percentage of Chinese nonfinancial firms with diversity of gender, nationality, education, and financial expertise. Age and tenure of board diversity, on the other hand, have little correlation with foreign institutional ownership. Further, the robustness regressions also confirmed the relationship between board diversity and foreign institutional ownership. This study made a unique attempt to provide empirical evidence that firms having diverse boards attract foreign institutional ownership by reducing asymmetric information.

scholarly journals Board structure and institutional ownership at the time of IPO

2017 ◽  
Vol 43 (9) ◽  
pp. 950-965 ◽  
Author(s):  
Suman Neupane ◽  
Biwesh Neupane
Keyword(s):  
Institutional Investors ◽  
Critical Time ◽  
Institutional Ownership ◽  
Board Independence ◽  
Board Structure ◽  
Data Set ◽  
Content Type ◽  
Institutional Holdings ◽  
Foreign Institutional Investors ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of mandatory regulatory provisions on board structure and the influence of such board structure on institutional holdings. Design/methodology/approach The study uses unique hand-collected data set of Indian IPOs during the 2004-2012 period after the corporate governance reforms with the introduction of clause 49 in the listing agreements in 2001. Using OLS regression, the paper empirically analyses the determinants of board size and board independence at the time of the IPOs and the influence of such a board structure on shareholdings by domestic and foreign institutional investors. Findings The authors find that complying with mandatory regulatory provisions does not impede firms from structuring their boards to reflect the firms’ advising and monitoring needs. The authors also find that complying with provisions have positive implication for the firm, as firms with greater board independence appear to attract more foreign institutional investors. Originality/value To the authors’ best knowledge, this is the first study to examine the issue in a regime where regulation mandates the composition of the board of directors. The paper also extends the literature on institutional holdings by providing evidence on the impact of board structure on institutional ownership at a critical time in a firm’s life cycle when concerns for endogeneity for empirical investigations are weaker.

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.

Foreign Institutional Investors and Corporate Voluntary Disclosure Around the World

2019 ◽  
Vol 94 (5) ◽  
pp. 319-348 ◽  
Author(s):  
Albert Tsang ◽  
Fei Xie ◽  
Xiangang Xin
Keyword(s):  
Institutional Investors ◽  
Voluntary Disclosure ◽  
Home Country ◽  
Investor Protection ◽  
Institutional Ownership ◽  
Management Forecasts ◽  
Disclosure Requirements ◽  
The World ◽  
Foreign Institutional Investors ◽  
The Impact

ABSTRACT We examine the impact of foreign institutional investors on firms' voluntary disclosure practices measured by management forecasts. In a sample of 32 non-U.S. countries, we find that, on average, foreign institutional investments lead to improved voluntary disclosure, and their impact is larger than that of domestic institutional investors. These results are more pronounced when foreign institutional investors (1) are unfamiliar with the firm's home country, (2) have longer investment horizons, and (3) are from countries with stronger investor protection and disclosure requirements than the firm's home country. However, we also find some evidence of voluntary disclosure deterioration in firms with foreign institutional investors from countries with inferior disclosure requirements and securities regulations and with concentrated foreign institutional ownership. Overall, our results suggest that the relation between foreign institutional investors and voluntary disclosure is much richer and more complex than what has been documented for domestic institutional investors in the literature.

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>

Audit committee effectiveness and financial reporting timeliness

2018 ◽  
Vol 9 (1) ◽  
pp. 34-55 ◽  
Author(s):  
Ahmed Atef Oussii ◽  
Neila Boulila Taktak
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Emerging Market ◽  
Listed Companies ◽  
Audit Committees ◽  
Future Research ◽  
Governance System ◽  
Content Type ◽  
Financial Expertise ◽  
The Impact

Purpose The purpose of this paper is to investigate whether there is any relationship between the effectiveness of an audit committee and the financial reporting timeliness of Tunisian listed companies as proxied by external audit delay (AD). Analysis focuses on five audit committee characteristics: authority, financial expertise, independence, size and diligence. Design/methodology/approach Empirical tests address 162 firm-year observations drawn from Tunisian listed companies during 2011-2013. Findings Multivariate analyses indicate that audit committees with members who have financial expertise are significantly associated with shorter AD. Thus, the results suggest that audit committee financial expertise contributes to the improvement of financial statements’ timeliness. Research limitations/implications The audit committee attributes examined in this study were based on DeZoort et al. (2002) framework. There could be other aspects of audit committee effectiveness such as audit committee tenure and audit committee chair characteristics, which were not addressed in the present study. Thus, future research may consider and examine these other components of audit committee effectiveness. Practical implications Findings have managerial implications. Companies can re-look into how to further improve audit committee composition in order to enhance the timeliness of financial reporting. The issues of audit committee effectiveness and timely reporting also affect regulators and policy makers since they need to play a role in the establishment of effective audit committees and the improvement of financial reporting timeliness. Originality/value This study is one of few that have examined the impact of audit committee effectiveness on ADs in an emerging market country. Findings lend credence to the belief that audit committee members’ financial expertise enhances the quality of financial reporting by firms in a North African market criticized for the lack of maturity of its corporate governance system (Klibi, 2015; Fitch Ratings, 2009).

scholarly journals Informed Trading of Futures Markets During the Financial Crisis: Evidence from the VPIN

2017 ◽  
Vol 9 (9) ◽  
pp. 123 ◽  
Author(s):  
Yen-Hsien Lee ◽  
Wen-Chien Liu ◽  
Chia-Lin Hsieh
Keyword(s):  
Financial Crisis ◽  
Institutional Investors ◽  
Special Kind ◽  
Informed Trading ◽  
Individual Level ◽  
Day Of The Week ◽  
Foreign Institutional Investors ◽  
The Individual ◽  
Probability Of Informed Trading ◽  
The Impact

This paper examines the impact of informed trading on futures returns during the 2008-2009 financial crisis. To precisely capture the informed trading in the highly volatile market during this period, we adopt the Volume-Synchronized Probability of Informed Trading (VPIN) of Easley, Hvidkjaer and O’Hara (2012) as our main measurement for informed trading. Besides, we also use a unique transaction dataset with investor identity to classify investors into domestic and foreign institutional investors, which the foreign institutional investors are supposed to be characterized by a higher degree of informed trading. Our empirical results show that the VPIN of foreign institutional investors has indeed significantly positive impacts on futures returns at the individual level. By contrast, the effect of the VPIN of domestic institutional investors on futures returns is only significant on Wednesdays, which could be seen as a special kind of day-of-the-week effect.

Subsidiary ownership decisions by bank holding companies

2019 ◽  
Vol 12 (3) ◽  
pp. 425-444
Author(s):  
Wenling Lu ◽  
Wan-Jiun Paul Chiou
Keyword(s):  
Institutional Investors ◽  
Fixed Effects ◽  
Institutional Ownership ◽  
Bank Holding Companies ◽  
Best Interest ◽  
Content Type ◽  
Holding Companies ◽  
Short Period ◽  
The Usa ◽  
The Impact

Purpose This study aims to examine the intertemporal changes in the institutional ownership of publicly traded bank holding companies (BHCs) in the USA. The role of owned-subsidiary investing in the portfolio decisions is investigated as compared to unaffiliated banks and non-bank institutional investors. Design/methodology/approach The authors apply panel regressions that control bank-fixed and time-fixed effects to study the impact of prudence, liquidity, information advantages and historical returns on each type of the institutional ownership from 1986 to 2014. Findings The subsidiary banks tend to invest in more shares of their parent BHCs when they are traded for a short period of time and when they have low-market risk, low turnover, a low capital equity ratio and great reliance on off-balance activities. However, the impact of these determinants of institutional ownership is opposite for unaffiliated banks and non-bank institutions. Research limitations/implications This study provides evidence that the criteria used by subsidiary banks to invest in their parent company stock are different than the unaffiliated banks and non-bank institutions, raising concerns about the owned-subsidiary investing activities and banks’ trustees’ duty to work in the best interest of their trust clients. Originality/value This paper provides a comprehensive analysis of the level and market value of BHC institutional ownership over the past three decades and the impact of different determinants on the ownership of BHCs by subsidiary banks, unaffiliated banks and non-bank institutional investors.

scholarly journals Financial Liberalization, Economic Growth and Investment Strategy: Lessons from Taiwan for New Industrial Countries

2015 ◽  
Vol 3 (2) ◽  
pp. 188 ◽  
Author(s):  
Yu-Wei Lan ◽  
Dan Lin ◽  
Lu Lin
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Foreign Capital ◽  
Investment Strategy ◽  
Capital Inflows ◽  
Investment Efficiency ◽  
The Real ◽  
Foreign Capital Inflows ◽  
Foreign Institutional Investors ◽  
The Impact

<p><em>To examine the impact of foreign capital inflows on Taiwan’s economy after internet bubbles of 2000, this study adopts data from the first quarter of 2001 to the second quarter 2015 to test if foreign capital inflows have positive impacts on Taiwan’s economic growth. This study also uses program trading and aims to prove that with financial liberalizations, the investment efficiency of foreign institutional investors is better than domestic institutional investors.</em></p><p><em>The results from the error correction model shows that capital formation, domestic savings and foreign direct investment all have positive relationships with the real economic growth. However, the rate of financing and foreign debt and depreciation all have negative relationships with the real economic growth. The results are all statistically significant. Hence, they do not completely support the hypothesis that foreign capital inflows are beneficial for economic growth.</em></p><p><em>Moreover, this study proves that the futures market in Taiwan is not strong-form market efficient. This result provides support for the hypothesis that the investment efficiency of foreign institutional investors is higher than that of domestic institutional investors. Investors can therefore raise their investment performance by following the investment strategies of foreign institutional investors.</em></p>

scholarly journals Ownership structure, corporate performance and failure: Evidence from panel data of emerging market the case of Jordan

2009 ◽  
Vol 6 (4) ◽  
pp. 96-114 ◽  
Author(s):  
Rami Zeitun
Keyword(s):  
Ownership Structure ◽  
Emerging Market ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Tobin’S Q ◽  
Government Ownership ◽  
Tobin's Q ◽  
The Impact

This study investigates the impact of ownership structure (mix and concentrate) on a company’s performance and failure in a panel estimation using 167 Jordanian companies during 1989-2006. The empirical evidence in this paper shows that ownership structure and ownership concentration play an important role in the performance and value of Jordanian firms. It shows that inefficiency is related to ownership concentration and to institutional ownership. A negative correlation between ownership concentration and firm’s performance both, ROA and Tobin’s Q, is found, while there is a positive impact on firm performance MBVR. The research also found that there is a significant negative relationship between government ownership and a firm’s accounting performance, while the other ownership structure mixes have significant coefficients only in Tobin’s Q using the matched sample. Firm’s profitability ROA was negatively and significantly correlated with the fraction of institutional ownership, and positively and significantly related to the market performance measure, MBVR. The result is robust when indicators of both concentration and ownership mix are included in the regressions. The results of this study are, to some extent, inconsistent with previous findings. This paper also used ownership structure to predict the corporate failure. The results suggest that government ownership is negatively related to the likelihood of default. Government ownership decreases the likelihood of default, but has a negative impact on a firm’s performance. The results suggest that, in order to increase a firm’s performance and decrease the likelihood of default, it is reasonable to reduce government ownership to some extent. Furthermore, a certain degree of ownership concentration is needed to increase the firm’s performance and to decrease the firm’s chance of default.

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