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Institutional Investor Heterogeneity: Implications for Strategic Decisions

Author

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  • Hugh Sherman
  • Sam Beldona
  • Maheshkumar Joshi

Abstract

There has been much attention given to the growing activism of institutional investors in corporate governance. However, past research has been unable to establish a consistent relationship between institutional investors and firm behavior. This may have occurred because institutional investors have been assumed to be a homogenous group possessing the same objectives and behaviors. For a sample of 271 U.S. Fortune 500 firms for the years 1990 to 1992, we categorized the firms' institutional investors into four distinct types: pension funds, mutual funds, banks, and insurance companies. We found significantly different relationships between these categories of institutional investors and firms' strategic investments.

Suggested Citation

  • Hugh Sherman & Sam Beldona & Maheshkumar Joshi, 1998. "Institutional Investor Heterogeneity: Implications for Strategic Decisions," Corporate Governance: An International Review, Wiley Blackwell, vol. 6(3), pages 166-173, July.
    • Handle: RePEc:bla:corgov:v:6:y:1998:i:3:p:166-173
    DOI: 10.1111/1467-8683.00101
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    Cited by:

    1. Guerini, Mattia & Harting, Philipp & Napoletano, Mauro, 2022. "Governance structure, technical change, and industry competition," Journal of Economic Dynamics and Control, Elsevier, vol. 135(C).
    2. Filippo Belloc & Eleonora Laurenza & M. Alessandra Rossi, 2016. "Corporate governance effects on innovation when both agency costs and asset specificity matter," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(6), pages 977-999.
    3. Michele Battisti & Filippo Belloc & Massimo Del Gatto, 2015. "Unbundling Technology Adoption and tfp at the Firm Level: Do Intangibles Matter?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(2), pages 390-414, June.
    4. Belloc, Filippo, 2010. "Corporate governance and innovation: an organizational perspective," MPRA Paper 21495, University Library of Munich, Germany.
    5. Pierre-Yves Gomez, 2003. "Jalons pour une histoire des théories du gouvernement des entreprises," Revue Finance Contrôle Stratégie, revues.org, vol. 6(4), pages 183-208, December.
    6. Chen, Victor Zitian & Hobdari, Bersant & Zhang, Yilei, 2019. "Blockholder heterogeneity and conflicts in cross-border acquisitions," Journal of Corporate Finance, Elsevier, vol. 57(C), pages 86-101.
    7. Olivier Brossard & Stéphanie Lavigne & Mustafa Erdem Sakinç, 2013. "Ownership structures and R&D in Europe: the good institutional investors, the bad and ugly impatient shareholders," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 1031-1068, August.
    8. Mishra, Chandra S., 2022. "Does institutional ownership discourage investment in corporate R&D?," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    9. Filippo Belloc & Eleonora laurenza & Maria Alessandra Rossi, 2015. "Corporate Governance and Sectoral Patterns of Innovation: Evidence from Italian Manufacturing Industries," Department of Economics University of Siena 706, Department of Economics, University of Siena.
    10. Carine Girard, 2001. "Une typologie de l'activisme des actionnaires minoritaires en France," Revue Finance Contrôle Stratégie, revues.org, vol. 4(3), pages 123-146, September.
    11. Kokotec Ivana Đunđek & Orsag Silvije & Čalopa Marina Klačmer, 2021. "The Impact of Institutional Investors’ Ownership on Performance and Financial Position: Evidence from Firms in the Republic of Croatia," South East European Journal of Economics and Business, Sciendo, vol. 16(1), pages 53-69, June.
    12. Tang, Tingfeng, 2020. "Hedge fund activism and corporate innovation," Economic Modelling, Elsevier, vol. 85(C), pages 335-348.
    13. Panicker, Vidya Sukumara & Upadhyayula, Rajesh Srinivas & Sivakumar, Sandeep, 2022. "Internationalization of hybrid state-owned enterprises from emerging markets: Institutional investors as enablers," Journal of Business Research, Elsevier, vol. 151(C), pages 409-422.
    14. Shruti, R. & Thenmozhi, M., 2024. "Foreign institutional ownership stability and stock price crash risk," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    15. Julien Le Maux, 2004. "Les déterminants de l’ampleur des bénéfices privés:un test sur données françaises," Revue Finance Contrôle Stratégie, revues.org, vol. 7(2), pages 195-231, June.

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