Do domestic or foreign institutional investors matter? The case of firm information asymmetry in Korea

Chune Young Chung, Hyeik Kim and Kainan Wang

Pacific-Basin Finance Journal, 2022, vol. 72, issue C

Abstract: We examine the impact of institutional investors on the effectiveness of firms' governance in Korea, as evidenced by information asymmetry. We find that lagged institutional blockholdings are negatively related to future information asymmetry measures, primarily through long-term, domestic institutions. We attribute this finding to domestic institutions' proximity advantages in local markets. Our findings imply that policy initiatives aiming to resolve firm-level agency issues in emerging markets may maximize their effectiveness by promoting the active participation of domestic institutions.

Keywords: Institutional blockholding; Information asymmetry; Corporate governance; Korean stock market; Chaebol; Agency problem (search for similar items in EconPapers)
JEL-codes: G11 G12 G15 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:72:y:2022:i:c:s0927538x22000221

DOI: 10.1016/j.pacfin.2022.101727

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