Does “Resetting” by Changing Corporate Name or Industry Category Appeals to Institutional Investments?

Abstract

We investigate whether firms changing their names or industry categories once and more than once would affect institutional shareholdings. By utilizing 5,733 observations of the Taiwan Stock Exchange listed firms, we apply multiple regression models firstly and Petersen regression models for further investigation to enhance the robustness of the empirical results. We then disclose several important findings as follows. First, institutional investors might not prefer holding the shares of the firms changing their names more than once. We infer that the performances of the firms changing names more than once might be doubtful. Second, institutional investors might decrease the shareholdings of the firms with industry categories changed. We claim that institutional investors might suspect these firms probably existing corporate governance issues. Besides, we argue that, to our best understanding, this study might fill the gap in the existing literature due to that the issues, firms changing their names or industry categories once or more than once, seem rarely explored in the relevant studies.

Untitled

“…Essentially, institutional investors, consisted of foreign institutional investors (FIIs), domestic institutional investors (DIIs), and security dealers (SDs), act as the vital roles in the business world [55]. For instance, firms with higher institutional ownerships are more likely to terminate poorly performing Chief Executive Officers and exhibit improvements in valuation over time [56].…”

Untitled

“…Essentially, institutional investors, consisted of foreign institutional investors (FIIs), domestic institutional investors (DIIs), and security dealers (SDs), act as the vital roles in the business world [55]. For instance, firms with higher institutional ownerships are more likely to terminate poorly performing Chief Executive Officers and exhibit improvements in valuation over time [56].…”

Untitled

“…Essentially, institutional investors, consisted of foreign institutional investors (FIIs), domestic institutional investors (DIIs), and security dealers (SDs), act as the vital roles in the business world [55]. For instance, firms with higher institutional ownerships are more likely to terminate poorly performing Chief Executive Officers and exhibit improvements in valuation over time [56].…”