Institutional monitoring: : Evidence from the F-Score

• Autores: Chune Young Chung, Chang Liu, Kainan Wang, Blerina Bela Zykaj
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 42, Nº. 7-8, 2015, págs. 885-914
• Idioma: inglés
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• Resumen

  • The extant literature shows that institutional investors engage in corporate governance to enhance a firm's long-term value. Measuring firm performance using the F-Score, we examine the persistent monitoring role of institutional investors and identify the financial aspects of a firm that institutional monitoring improves. We find strong evidence that long-term institutions with large shareholdings consistently improve a firm's F-Score and that such activity occurs primarily through the enhancement of the firm's operating efficiency. Other institutions reduce a firm's F-Score. Moreover, we find evidence that, while monitoring institutions improve a firm's financial health, transient (followed by non-transient) institutions trade on this information