Institutional Investors and Corporate Governance: A New Zealand Perspective

Tan, Aik Win; Keeper, Trish

doi:10.2139/ssrn.1864274

Cited by 9 publications

(9 citation statements)

References 3 publications

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“…This positive relationship can be an outcome of the monitoring exercised by institutional investors who put in place adequate governance mechanisms that lower both agency problems and information asymmetry and enhance, thus, the firm performance (Alvarez et al, 2016; Boone & White, 2015; Demiralp et al, 2011). As a matter of fact, this finding contradicts previous studies, which report that institutional investors exercise no monitoring on management or prioritize their private benefits at the expense of outside shareholders (Dyck & Zingales, 2004; Tan & Keeper, 2008).…”

Section: Resultscontrasting

confidence: 93%

“…Moreover, addressing governance issues of investees involves substantial costs. These costs range from the search for legal and professional advice to the time and other resources spent by employees on such matters, which could be used to accomplish other investments and tasks instead (Black & Coffee, Jr., 1994; Tan & Keeper, 2008). Finally, the free‐rider problem harshly impedes institutional activism.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

Jabbouri

2020

Int. J Fin Econ

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This paper attempts to document the value relevance of the largest shareholders' identity across the recent financial crisis of 2008 in Morocco, one of the most important emerging markets in the Middle East and North Africa (MENA). To examine the impact of ownership identity on firm performance, this study employs panel data analysis. It uses data of non‐financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2017. To uncover the hidden facets of the aforementioned relationship and examine how it is shaped by the financial crisis, a pre‐ and post‐crisis analysis is performed. The findings reveal that institutional ownership affects positively firm performance in both, pre‐ and post‐crisis periods. Compared to the pre‐crisis period, investors further recognize and reward the value‐enhancing role of institutional ownership during post‐crisis period. Our analysis suggests that the incentives to expropriate minority shareholders within family‐controlled firms increase during financial market turmoil. Family‐owners switched from protecting to misusing the firm's resources for the sake of preserving their private interests. This research raises awareness for managers of family‐controlled firms to review their corporate governance practices and align them with shareholders' value maximization. Our study suggests that Moroccan authorities must strengthen country‐level governance mechanisms. The failure to accomplish this objective could have severe implications ranging from the inefficient allocation of resources in the economy to the destruction of shareholders' value.

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Section: Resultscontrasting

confidence: 93%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

Jabbouri

2020

Int. J Fin Econ

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“…On the contrary, other studies have mentioned that mutual funds are assumed to be less involved in the governance of the company compared with other institutions, and they are believed to be more concerned with just profit-making (Hoskisson et al, 2002;Tan and Keeper, 2008).…”

Section: Investment Companies/mutual Fundsmentioning

confidence: 95%

Institutional investors and voluntary disclosure and transparency: the case of Egypt

El-Diftar

Jones

Ragheb

et al. 2017

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Purpose Disclosure and transparency are major pillars of corporate governance which need to be greatly promoted in Egypt. This research aims to understand how different kinds of institutional investors affect levels of voluntary disclosure and transparency. Design/methodology/approach The research was conducted on the most active Egyptian companies over a period of five years. A voluntary disclosure checklist was first developed to assess levels of voluntary disclosure and transparency. Findings Empirical results support significant positive impacts of both bank ownership and foreign ownership on voluntary disclosure and transparency. Among the four firm characteristics controlled for in the research, firm size was the only one with a highly significant positive impact on voluntary disclosure and transparency. Research limitations/implications The results of this research may not be generalized to all companies, as it was only conducted on the most active firms on the Egyptian Exchange. Therefore, it is recommended that future researches integrate a more diversified sample. Practical implications The research provides empirical evidence that institutional investors are not a homogeneous group and that different kinds of institutional ownership impact differently on voluntary disclosure and transparency. As such, some institutional investors are more influential than others when it comes to increasing corporate voluntary disclosure and transparency and in reducing agency problems. Originality/value This research offers assistance to policy makers interested in enhancing corporate disclosure and transparency. It is particularly important during any adjustment to ownership policies in Egypt.

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“…Because the added value of the active institution’s effort typically does not compensate for its costs, no institution should undertake such actions (Tan and Keeper, 2008). Moreover, the free-rider problem arises where all shareholders enjoy the benefits at the expense of the few who undertake expensive monitoring actions.…”

Section: Literature Reviewmentioning

confidence: 99%

How Moroccan institutional investors view dividend policy

Baker

Jabbouri

2017

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Purpose The purpose of this paper is to examine how Moroccan institutional investors view dividend policy. It discusses the importance these investors attach to the dividend policy of their investee firms, how much influence they exercise in shaping investee firms’ dividend policies, their reactions to changes in dividends, and their views on various explanations for paying dividends. Design/methodology/approach A mail survey provides a respondent and firm profile and responses to 28 questions involving various explanations for paying dividends and 30 questions on different dividend issues. Findings Institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Although liquidity needs are a major driver, taxes play little role in shaping dividend preferences. Respondents agree with multiple explanations for paying dividends giving the strongest support to catering, bird-in-the-hand, life cycle, signaling, and agency theories. Research limitations/implications Despite a high response rate, the number of respondents limits partitioning the sample and testing for significant differences between different groups. Practical implications The lack of communication between Casablanca Stock Exchange (CSE) listed firms and institutional investors may depress stock prices and increase volatility. The results suggest agency problems and a weak governance environment at the CSE. Originality/value This study documents the importance that institutional investors place on dividend policy, their reactions to changes in their investees’ dividend policy, and the methods used to influence these firms. It extends previous research by reporting the level of support Moroccan institutional investors give to various explanations for paying dividends.

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Institutional Investors and Corporate Governance: A New Zealand Perspective

Cited by 9 publications

References 3 publications

Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

Institutional investors and voluntary disclosure and transparency: the case of Egypt

How Moroccan institutional investors view dividend policy

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