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The impact of institutional investors’ ownership on firm’s value and performance

Hoang, Phuong Thao LU and Olsson, Markus LU (2022) NEKN02 20221
Department of Economics
Abstract
Institutional investors and large investors play a crucial role as a governance mechanism to protect outsiders from excessive rent extraction by insiders. Where institutional investors can serve as a governance mechanism to intervene and discipline management, it also has several drawbacks and imperfections. This thesis investigates the principal-agent problem and empirically investigates how institutional investors impact shareholder value and firm operating performance on the Swedish market for large- and small-cap firms listed on the Stockholm Stock Exchange. The sample consists of 102 large-cap and 78 small-cap firms, including financial and non-financial except investment companies, which are observed quarterly from 2014 to 2021. The... (More)
Institutional investors and large investors play a crucial role as a governance mechanism to protect outsiders from excessive rent extraction by insiders. Where institutional investors can serve as a governance mechanism to intervene and discipline management, it also has several drawbacks and imperfections. This thesis investigates the principal-agent problem and empirically investigates how institutional investors impact shareholder value and firm operating performance on the Swedish market for large- and small-cap firms listed on the Stockholm Stock Exchange. The sample consists of 102 large-cap and 78 small-cap firms, including financial and non-financial except investment companies, which are observed quarterly from 2014 to 2021. The instrumental variable approach results in a negative impact from institutional investors on large-cap firm operating performance. Additionally, institutional investors have a negative impact on firm operating performance for small-cap firms. Consequently, total institutional investors impact shareholder value negatively. Furthermore, the thesis finds that several categories of institutional investors contribute to shareholder value and firm performance differently. (Less)
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author
Hoang, Phuong Thao LU and Olsson, Markus LU
supervisor
organization
course
NEKN02 20221
year
type
H1 - Master's Degree (One Year)
subject
keywords
Corporate governance, delegated monitoring, agency problem, institutional investors, shareholder value
language
English
id
9087931
date added to LUP
2022-10-10 09:35:29
date last changed
2022-10-10 09:35:29
@misc{9087931,
  abstract     = {{Institutional investors and large investors play a crucial role as a governance mechanism to protect outsiders from excessive rent extraction by insiders. Where institutional investors can serve as a governance mechanism to intervene and discipline management, it also has several drawbacks and imperfections. This thesis investigates the principal-agent problem and empirically investigates how institutional investors impact shareholder value and firm operating performance on the Swedish market for large- and small-cap firms listed on the Stockholm Stock Exchange. The sample consists of 102 large-cap and 78 small-cap firms, including financial and non-financial except investment companies, which are observed quarterly from 2014 to 2021. The instrumental variable approach results in a negative impact from institutional investors on large-cap firm operating performance. Additionally, institutional investors have a negative impact on firm operating performance for small-cap firms. Consequently, total institutional investors impact shareholder value negatively. Furthermore, the thesis finds that several categories of institutional investors contribute to shareholder value and firm performance differently.}},
  author       = {{Hoang, Phuong Thao and Olsson, Markus}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The impact of institutional investors’ ownership on firm’s value and performance}},
  year         = {{2022}},
}