Institutional investors’ activism and credit ratings

Farooqi, Javeria; Jory, Surendranath Rakesh; Ngo, Thanh

doi:10.1007/s12197-015-9332-8

Cited by 10 publications

(14 citation statements)

References 27 publications

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“…A general argument in this field is that the activism of institutional investors can provide benefits to shareholders ( Becht et al, 2008 ; Buchanan et al, 2012 ; Brav et al, 2018 ). However, there is also opposite evidence to the contrary ( Gillan and Starks, 2007 ; Farooqi et al, 2017 ; Routledge, 2020 ). In Korea, NPF declared its investment direction with regard to corporate ESG activities.…”

Section: Introductionmentioning

confidence: 90%

“…Many prior studies tried to investigate the effective governance role of institutional investors. The general argument is that institutional investor activism can provide benefits to shareholders ( Becht et al, 2008 ; Buchanan et al, 2012 ; Brav et al, 2018 ), but there is also opposite evidence ( Gillan and Starks, 2007 ; Farooqi et al, 2017 ; Routledge, 2020 ). For example, Mehrani et al (2017) divided institutional investors into active institutional investors and passive institutional investors, and they reported that active institutional investors had a positive effect on earning quality, but passive institutional investors did not.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…However, Gillan and Starks (2007) insisted that institutional investor activism lowers corporate value by hindering managers from pursuing long-term goals. Farooqi et al (2017) also classified institutional investors into active and passive ones, and after analyzing the effect on corporate credit grade, they reported that the more the passive institutional investors, the higher the corporate credit score.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…As the role of institutional investors in the financial market becomes more important, studies have been conducted that the activism of institutional investors can provide benefits to shareholders ( Gillan and Starks, 2000 , 2007 ; Becht et al, 2008 ; Buchanan et al, 2012 ; Farooqi et al, 2017 ; Brav et al, 2018 ; Routledge, 2020 ). A general argument in this field is that the activism of institutional investors can provide benefits to shareholders ( Becht et al, 2008 ; Buchanan et al, 2012 ; Brav et al, 2018 ).…”

Section: Introductionmentioning

confidence: 99%

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Environment, Social, and Governance Performance and Financial Performance With National Pension Fund Investment: Evidence From Korea

Son

Kim

2022

Front. Psychol.

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This study attempts to examine the relationship between environment, social, and governance (ESG) management and financial performance and the role of socially responsible investment in the National Pension Fund (NPF), Korea’s largest institutional investor. This study tries to provide evidence for the slack resource hypothesis by verifying whether companies with higher financial performance make more efforts to improve ESG performance. In addition, we tried to validate whether NPF is expanding its investments in corporations with high economic performance and high ESG performance. Based on our analysis, Korean companies with good financial performance actively participate in ESG. When we compared the performance between 2019 and 2020, companies with high ESG performance increased regardless of financial performance level, whereas companies with high financial performance and low ESG performance decreased. This represents that the perception and attitude of Korean companies toward ESG management are evolving. NPF has a high investment ratio for firms having a high ratio in both financial and ESG performance. NPF further invested in companies with high ESG performance, even if the financial performance is not decent. This study provides evidence that Korean companies’ interest in ESG management as well as the behavior of socially responsible investment of NPF are rising.

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Section: Introductionmentioning

confidence: 90%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Environment, Social, and Governance Performance and Financial Performance With National Pension Fund Investment: Evidence From Korea

Son

Kim

2022

Front. Psychol.

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“…They concluded that a higher protection of debtholders' rights generally reduces bond yield-spreads and increases bond ratings. www.hrmars.com Farooqi, Jory and Ngo (2015) study the association between institutional shareholdings and credit ratings. They classified the institutional investors based on their degree of intervention and activism levels and found that passive investors are associated with better-rated firms while active ones are associated with lower-rated firms.…”

Section: Literature Reviewmentioning

confidence: 99%

Ownership Monitoring Mechanism over Sukuk Credit Rating

Elhaj¹,

Muhamed²,

Ramli³

et al. 2016

IJARBSS

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This study examines the effect of ownership structure as one of the corporate governance monitoring mechanism to Sukuk rating. Sukuk rating represents the credit risk assessment made by local rating agencies, RAM and MARC. This study is based in Malaysia for the period of 2008-2013. Two proxy for ownership variables chosen were institutional and insider investors. The results of this study showed that institutional investors have a non-significant effect to Sukuk rating with a mix positive and negative directions. When this variable was tested alone together with the control variables of financial characteristics -leverage, profit and size, the results showed a positive and non-significant effect to Sukuk rating. However, the direction changed when the variable was tested with the appearance of insider investors to proxy ownership and the non-significant effect remains. Insider investors showed a significant and negative effect to Sukuk rating across tested models.

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The relationship between institutional investors’ holding in public firms and the level of corporate solvency

Pivin,

Yagil

2024

J Manag Gov

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Institutional investors’ activism and credit ratings

Cited by 10 publications

References 27 publications

Environment, Social, and Governance Performance and Financial Performance With National Pension Fund Investment: Evidence From Korea

Environment, Social, and Governance Performance and Financial Performance With National Pension Fund Investment: Evidence From Korea

Ownership Monitoring Mechanism over Sukuk Credit Rating

The relationship between institutional investors’ holding in public firms and the level of corporate solvency

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