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Country-level foreign institutional investment horizons, excess cash holdings, and firm value: International evidence

Author

Listed:
  • Imad Rahim

    (NUST Business School, National University of Sciences and Technology)

  • Rehman U. Mian

    (NUST Business School, National University of Sciences and Technology)

  • Affan Mian

    (University of Chicago Booth School of Business)

Abstract

Using a sample of 15,332 firms from 32 countries over 2007 and 2018, this study investigates the impact of country-level heterogeneity in foreign institutional investment horizons on the value of excess cash holdings. We use a country-level adjustment to the investment horizon approach of Gaspar et al. (2005) to measure the country-level horizons of foreign institutional investors (FIIs). The findings reveal that long-term country-level FIIs significantly increase the value of excess cash holdings. The impact of short-term country-level FIIs remains statistically insignificant. We obtain qualitatively unchanged results in the additional checks for robustness. Overall, our results highlight the significance of country-level heterogeneity in the monitoring efficacy of FIIs in corporate strategic decisions across individual portfolio countries.

Suggested Citation

  • Imad Rahim & Rehman U. Mian & Affan Mian, 0000. "Country-level foreign institutional investment horizons, excess cash holdings, and firm value: International evidence," Proceedings of Economics and Finance Conferences 13815929, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:13815929
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Investment horizon; Cash holdings; Foreign institutional ownership; International corporate governance; Firm value;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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