The asymmetric impact of institutional ownership on firm performance: panel smooth transition regression model

Abstract

Purpose This study aims to test the asymmetric impact of institutional ownership on firm performance. This study does it through an examination of the hypotheses of efficient monitoring and convergence of interests from the Tehran Stock Exchange (TSE). Design/methodology/approach Using a panel smooth transition regression model, as a new econometric technique, this paper examined the data to explore the asymmetric impact of institutional ownership on firm performance. With regard to 177 firms for the period 2009 to 2018 from TSE. Performance proxies are returned on asset (ROA), return on equity (ROE) and Tobins’ Q. Findings The empirical for three performance proxies results strongly rejected the null hypothesis of linearity and the test for no remaining nonlinearity indicated a model with one transition function and one threshold parameters. The first regime (levels of institutional ownership below 28.5% and 43.5% for ROA and Tobins’ Q) showed that performance increases with institutional ownership while the trend was reversed in the second regime (levels of institutional ownership above 28.5% and 43.5% for ROA and Tobins’ Q percent). Also, institutional shareholders percent between 4.2 and 14.1 explain the positive relationship between institutional shareholders and ROE. Originality/value Furthermore, the findings of this study suggest that the application of institutional ownership theories calls for more inquiry.

Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections

“…Many of these investigations have increased due to the emergence of regulatory provisions (Thansi 2004). One of the critical factors influencing the quality of financial statement and performance is the political process (Daryaei and Fattahi 2020). We believe that this factor has a significant influence due to the distinctive character of the public sector, especially the government, which is strongly influenced by political circumstances.…”

“…Thus, resilient corporate governance should increase the external transparency of companies' activities and increase public confidences (Beisland et al 2015;Lin and Hwang 2010;Roussey 2000). In this regard, audit committees, an essential part of a robust corporate governance mechanism (Felo et al 2003;Fulop 2019;Oncioiu et al 2020), have been known to play vital roles in improving the performance of corporate governance smoothly through producing the quality of financial reporting to help the users to make optimal decisions (Abdullah et al 2018;Daryaei and Fattahi 2020). For example, one of the critical components of corporate governance recommendations in the UK is that the audit committees must have at least one experienced and financially literate member.…”

Gcg, Profitabilitas, Dan Nilai Perusahaan Asuransi: Efek Moderasi Ukuran Perusahaan

“…Kepemilikan/investor institusional dapat berperan dalam memonitor agen (manajer) perusahaan. Kepemilikan institusional meningkatkan kualitas tata kelola perusahaan yang berperan penting dalam efisiensi pasar modal serta mengkoreksi harga saham dengan informasi yang tepat, sehingga mengurangi volatilitas pengembalian saham (Daryaei & Fattahi, 2020). Investor institusional memiliki informasi dan keahlian tentang kinerja perusahaan yang berdampak pada nilai perusahaan (Ellili, 2011).…”

Institutional Investors’ Shareholding, Control Transfer and Corporate Performance

“…At the same time, they give up the way of "voting with their feet" in the past and begin to participate in corporate governance as stable shareholders (Cella et al, 2013). Other scholars questioned the positive correlation between the shareholding ratio of institutional investors and corporate performance, believing that institutional investors pay more attention to the short-term value of a company and it is difficult to generate motivation to improve corporate governance (Webb et al, 2003;Dyck et al, 2019;Daryaei & Fattahi, 2020).…”