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Institutional Investors and their Impact on Shareholder Value

Westling, Johan LU and Monsén, Sam LU (2017) BUSN79 20171
Department of Business Administration
Abstract (Swedish)
Purpose
The purpose of this thesis is to study if and how institutional investors have any impact on shareholder value and operating performance on the Swedish market. The tested explanatory variables are institutional investors grouped in different ways depending on their attributes, firm size, board size and board structure, leverage, firm size, share turnover and stock volatility.

Theoretical Perspective
This paper is rooted in the principal-agent problem and whether institutional shareholders can use governance mechanisms to increase shareholder value for all investors.

Methodology
This thesis uses a cross-sectional OLS regression approach in line with Cornett et al. (2007) and Ferreira and Matos (2008). Furthermore, we... (More)
Purpose
The purpose of this thesis is to study if and how institutional investors have any impact on shareholder value and operating performance on the Swedish market. The tested explanatory variables are institutional investors grouped in different ways depending on their attributes, firm size, board size and board structure, leverage, firm size, share turnover and stock volatility.

Theoretical Perspective
This paper is rooted in the principal-agent problem and whether institutional shareholders can use governance mechanisms to increase shareholder value for all investors.

Methodology
This thesis uses a cross-sectional OLS regression approach in line with Cornett et al. (2007) and Ferreira and Matos (2008). Furthermore, we control for endogeneity using 2SLS.

Empirical Perspective
Sample used in this thesis comprise of 69 Swedish firms, non-financial and financial except for investment companies, listed on the Stockholm Stock Exchange large cap list. The quarterly data from 2012-2016 is gathered from Modular Finance (Holdings), DataStream and Bloomberg. Testing period is 2012-2016, a period used in order to have the highest precision on raw data.

Conclusions
This paper finds that institutional investors have a negative impact on shareholder value, while pressure-sensitive investors have a positive impact on operating performance. This has practical implications for retail, as well as professional investors. (Less)
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author
Westling, Johan LU and Monsén, Sam LU
supervisor
organization
course
BUSN79 20171
year
type
H1 - Master's Degree (One Year)
subject
keywords
Corporate Governance, Shareholder Value, Institutional Ownership, Tobin’s Q, Return on Asset
language
English
id
8920526
date added to LUP
2017-07-05 16:23:12
date last changed
2017-07-05 16:23:12
@misc{8920526,
  abstract     = {Purpose
The purpose of this thesis is to study if and how institutional investors have any impact on shareholder value and operating performance on the Swedish market. The tested explanatory variables are institutional investors grouped in different ways depending on their attributes, firm size, board size and board structure, leverage, firm size, share turnover and stock volatility.

Theoretical Perspective
This paper is rooted in the principal-agent problem and whether institutional shareholders can use governance mechanisms to increase shareholder value for all investors. 

Methodology
This thesis uses a cross-sectional OLS regression approach in line with Cornett et al. (2007) and Ferreira and Matos (2008). Furthermore, we control for endogeneity using 2SLS.

Empirical Perspective
Sample used in this thesis comprise of 69 Swedish firms, non-financial and financial except for investment companies, listed on the Stockholm Stock Exchange large cap list. The quarterly data from 2012-2016 is gathered from Modular Finance (Holdings), DataStream and Bloomberg. Testing period is 2012-2016, a period used in order to have the highest precision on raw data.

Conclusions
This paper finds that institutional investors have a negative impact on shareholder value, while pressure-sensitive investors have a positive impact on operating performance. This has practical implications for retail, as well as professional investors.},
  author       = {Westling, Johan and Monsén, Sam},
  keyword      = {Corporate Governance,Shareholder Value,Institutional Ownership,Tobin’s Q,Return on Asset},
  language     = {eng},
  note         = {Student Paper},
  title        = {Institutional Investors and their Impact on Shareholder Value},
  year         = {2017},
}