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On institutional ownership and firm performance : a disaggregated view

journal contribution
posted on 01.12.2009, 00:00 authored by Prasad BhattacharyaPrasad Bhattacharya, M Graham
We study the relationship between institutional ownership and firm performance in Finland. A systems approach is employed to investigate the potential two-way causality between firm performance and ownership structure. Three-stage least squares estimation technique is used to solve for the systems. The evidence suggests an endogeneity problem between firm performance and institutional ownership. However, the magnitude of the problem differs with respect to the concentration of ownership measure used. Our results show that a more equal distribution of the voting power among the largest institutional stakeholder may exert positive effects on firm performance. We also find a significant difference relating to firm performances and equity ownerships between the two classes of institutional investor. Consistent with the ownership structure in Finland, we find that a simple ownership concentration index does not influence firm performance.

History

Journal

Journal of multinational financial managment

Volume

19

Issue

5

Pagination

370 - 394

Publisher

Elsevier B. V.

Location

Amsterdam, The Netherlands

ISSN

1042-444X

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2009, Elsevier B.V.