Does Board Composition Matter to Institutional Investors?

IF 1.2 Q3 BUSINESS, FINANCE

Journal of Emerging Market Finance Pub Date : 2019-06-18 DOI:10.1177/0972652719846354

Shashank Bansal, M. Thenmozhi

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引用次数: 5

Abstract

This study examines the resource dependency and signalling role of independent directors from the perspective of institutional investor’s and also investigates if the presence of large blockholder moderates the signalling effect. This study uses the quasi-natural experiment to examine this relationship. The difference-in-difference (DiD) analysis of 5,298 firm observations covering 618 National Stock Exchange (NSE) listed Indian firms for the period 2001–2011 provides empirical evidence that board composition does matter to institutional investors. We find that non-compliant firms who adopted the board independence requirement experience a significant increase in institutional ownership relative to previously compliant firms. We also find that institutional investors have invested more in family-owned firms during post-mandate period compared to government-, private- and foreign-owned firms. Overall, this study contributes to the existing literature on resource dependency theory and signalling theory and shows that the board independence acts as a signal to institutional investors and decreases the agency cost and cost of monitoring. JEL Codes: G3, G11, G34, G38, G23

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董事会构成对机构投资者重要吗?

本文从机构投资者的角度考察了独立董事的资源依赖和信号作用，并探讨了大股东的存在是否会调节信号作用。本研究采用准自然实验来检验这种关系。对2001年至2011年期间覆盖618家印度国家证券交易所(NSE)上市公司的5298家公司观察结果进行的差异分析(DiD)提供了经验证据，证明董事会构成对机构投资者确实很重要。我们发现，采用董事会独立性要求的不合规公司相对于之前合规的公司，机构所有权显著增加。我们还发现，与政府、私营和外资企业相比，机构投资者在授权后时期对家族企业的投资更多。总体而言，本研究对资源依赖理论和信号理论的现有文献有所贡献，表明董事会独立性对机构投资者起到了信号作用，降低了代理成本和监督成本。JEL代码:G3, G11, G34, G38, G23

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来源期刊

Journal of Emerging Market Finance BUSINESS, FINANCE-

CiteScore

1.80

自引率

33.30%

发文量

期刊介绍： The Journal of Emerging Market Finance is a forum for debate and discussion on the theory and practice of finance in emerging markets. While the emphasis is on articles that are of practical significance, the journal also covers theoretical and conceptual aspects relating to emerging financial markets. Peer-reviewed, the journal is equally useful to practitioners and to banking and investment companies as to scholars.