Institutional investors in Australia: do they play a homogenous monitoring role?

Muniandy, Puspa, Tanewski, George and Johl, Shireenjit K. 2016, Institutional investors in Australia: do they play a homogenous monitoring role?, Pacific-Basin finance journal, vol. 40, Part B, pp. 266-288, doi: 10.1016/j.pacfin.2016.01.001.

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Title Institutional investors in Australia: do they play a homogenous monitoring role?
Author(s) Muniandy, Puspa
Tanewski, GeorgeORCID iD for Tanewski, George orcid.org/0000-0003-3668-3416
Johl, Shireenjit K.ORCID iD for Johl, Shireenjit K. orcid.org/0000-0001-5412-9000
Journal name Pacific-Basin finance journal
Volume number 40
Season Part B
Start page 266
End page 288
Total pages 23
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2016-12
ISSN 0927-538X
Keyword(s) institutional investors
ownership structure
agency problems
monitoring
performance
Summary This paper examines whether the presence of institutional investors in Australian publicly listed firms has an impact on firm performance. Our findings provide evidence that institutional investors are not a homogenous group of investors and that it is important to distinguish them by investment objective and their monitoring ability to exert influence. Results show that while institutional investors taken as a homogenous group appear to play an important governance role in terms of future firm performance, our analyses of the three broad typologies of institutional investors and by their respective sub-categories reveal differing conclusions. While pressure-resistant institutional investors (i.e., independent and having only investment relationship) significantly improve the short-term performance of Australian listed firms, they do not show any long-term monitoring ability. The impact of pressure-sensitive institutional investors is less clear, which is consistent with the view that these investors have some existing and potential business ties with the investee firms. More interestingly, we find that "faceless" investors via nominee and trustee institutions play an important monitoring role in creating a long-term firm value. Results have policy implications on the monitoring abilities of institutional investors in Australia.
Language eng
DOI 10.1016/j.pacfin.2016.01.001
Field of Research 150201 Finance
1502 Banking, Finance And Investment
1501 Accounting, Auditing And Accountability
Socio Economic Objective 900101 Finance Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2016, Elsevier
Persistent URL http://hdl.handle.net/10536/DRO/DU:30081186

Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
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