Institutional ownership, firm performance and financial distress
(2025) NEKN02 20251Department of Economics
- Abstract
- This study examines the relationship between institutional ownership and firm performance, with a particular focus on how such ownership may influence outcomes under conditions of financial distress. Using a panel dataset of Swedish firms listed on the Nasdaq OMX Stockholm from 2014 to 2024, we explore whether institutional ownership and its short-term changes (ΔIO) are associated with improved firm performance and if institutional investors mitigate the negative effect of financial distress. The finding suggests that both total institutional ownership and ΔIO are positively associated with firm value and operating performance, particularly in the 2SLS models. However, we find limited evidence that institutional investors alleviate the... (More)
- This study examines the relationship between institutional ownership and firm performance, with a particular focus on how such ownership may influence outcomes under conditions of financial distress. Using a panel dataset of Swedish firms listed on the Nasdaq OMX Stockholm from 2014 to 2024, we explore whether institutional ownership and its short-term changes (ΔIO) are associated with improved firm performance and if institutional investors mitigate the negative effect of financial distress. The finding suggests that both total institutional ownership and ΔIO are positively associated with firm value and operating performance, particularly in the 2SLS models. However, we find limited evidence that institutional investors alleviate the adverse effects of financial distress, in several cases, their presence appears to exacerbate negative outcomes, potentially reflecting a “vote with their feet” response. Finally, we distinguish between foreign and domestic institutional ownership, uncovering that foreign investors generally exert a stronger, though less stable, influence on firm performance. These findings highlight the nuanced role of institutional investors and prove new insights into their behavior under financial pressure. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9194533
- author
- Lin, Shih-Wei LU and Cao, Chenyu
- supervisor
-
- Marco Bianco LU
- organization
- course
- NEKN02 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Institutional ownership, firm performance, financial distress
- language
- English
- id
- 9194533
- date added to LUP
- 2025-09-12 10:42:34
- date last changed
- 2025-09-12 10:42:34
@misc{9194533,
abstract = {{This study examines the relationship between institutional ownership and firm performance, with a particular focus on how such ownership may influence outcomes under conditions of financial distress. Using a panel dataset of Swedish firms listed on the Nasdaq OMX Stockholm from 2014 to 2024, we explore whether institutional ownership and its short-term changes (ΔIO) are associated with improved firm performance and if institutional investors mitigate the negative effect of financial distress. The finding suggests that both total institutional ownership and ΔIO are positively associated with firm value and operating performance, particularly in the 2SLS models. However, we find limited evidence that institutional investors alleviate the adverse effects of financial distress, in several cases, their presence appears to exacerbate negative outcomes, potentially reflecting a “vote with their feet” response. Finally, we distinguish between foreign and domestic institutional ownership, uncovering that foreign investors generally exert a stronger, though less stable, influence on firm performance. These findings highlight the nuanced role of institutional investors and prove new insights into their behavior under financial pressure.}},
author = {{Lin, Shih-Wei and Cao, Chenyu}},
language = {{eng}},
note = {{Student Paper}},
title = {{Institutional ownership, firm performance and financial distress}},
year = {{2025}},
}