Stewardship, institutional investors monitoring, and firm value: Evidence from the United Kingdom

IF 2.9 3区经济学 Q2 BUSINESS, FINANCE

Journal of Multinational Financial Management Pub Date : 2022-06-01 DOI:10.1016/j.mulfin.2022.100732

Nghia Huu Nguyen, Cheng-Yi Shiu

{"title":"Stewardship, institutional investors monitoring, and firm value: Evidence from the United Kingdom","authors":"Nghia Huu Nguyen, Cheng-Yi Shiu","doi":"10.1016/j.mulfin.2022.100732","DOIUrl":null,"url":null,"abstract":"<div><p>Stewardship<span> encourages institutional investors to perform a monitoring function through cooperation and collective action. The United Kingdom was the first country to publish a Stewardship Code. This motivates us to investigate the monitoring role of institutional investors in the UK. We find that institutional ownership has a positive influence on firms' one-year future valuation and quality of corporate governance practices. The positive relationship identified is mainly driven by independent and long-term (ILT) institutional ownership. We additionally demonstrate that acquirers with higher ILT institutional ownership make better acquisition decisions. The performance of cross-border acquisitions does not differ from the performance of domestic deals. Overall, our results are consistent with the view that ILT institutional investors contribute to firm monitoring and promoting sound corporate governance practices, which can be attributed to their long-term investment horizons and arm’s-length relationships with investee companies.</span></p></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"64 ","pages":"Article 100732"},"PeriodicalIF":2.9000,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Multinational Financial Management","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1042444X22000044","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

Stewardship encourages institutional investors to perform a monitoring function through cooperation and collective action. The United Kingdom was the first country to publish a Stewardship Code. This motivates us to investigate the monitoring role of institutional investors in the UK. We find that institutional ownership has a positive influence on firms' one-year future valuation and quality of corporate governance practices. The positive relationship identified is mainly driven by independent and long-term (ILT) institutional ownership. We additionally demonstrate that acquirers with higher ILT institutional ownership make better acquisition decisions. The performance of cross-border acquisitions does not differ from the performance of domestic deals. Overall, our results are consistent with the view that ILT institutional investors contribute to firm monitoring and promoting sound corporate governance practices, which can be attributed to their long-term investment horizons and arm’s-length relationships with investee companies.

查看原文本刊更多论文

管理、机构投资者监督和公司价值:来自英国的证据

管理鼓励机构投资者通过合作和集体行动履行监督职能。英国是第一个公布《管理守则》的国家。这促使我们调查英国机构投资者的监督作用。研究发现，机构持股对公司未来一年的估值和公司治理实践质量具有正向影响。所发现的积极关系主要是由独立和长期(ILT)的机构所有权驱动的。此外，我们还证明，拥有更高ILT机构所有权的收购方会做出更好的收购决策。跨国收购的表现与国内交易的表现并无不同。总体而言，我们的研究结果与以下观点一致:ILT机构投资者有助于公司监督和促进良好的公司治理实践，这可归因于他们的长期投资视野和与被投资公司的公平关系。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Multinational Financial Management BUSINESS, FINANCE-

CiteScore

7.30

自引率

4.80%

发文量

审稿时长

30 days

期刊介绍： International trade, financing and investments have grown at an extremely rapid pace in recent years, and the operations of corporations have become increasingly multinationalized. Corporate executives buying and selling goods and services, and making financing and investment decisions across national boundaries, have developed policies and procedures for managing cash flows denominated in foreign currencies. These policies and procedures, and the related managerial actions of executives, change as new relevant information becomes available. The purpose of the Journal of Multinational Financial Management is to publish rigorous, original articles dealing with the management of the multinational enterprise. Theoretical, conceptual, and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • Foreign exchange risk management • International capital budgeting • Forecasting exchange rates • Foreign direct investment • Hedging strategies • Cost of capital • Managing transaction exposure • Political risk assessment • International working capital management • International financial planning • International tax management • International diversification • Transfer pricing strategies • International liability management • International mergers.