Institutional Investors, Financial Health, and Equity Valuation

Dan S. Dhaliwal, Oliver Zhen Li and Hong Xie

Asia-Pacific Journal of Accounting & Economics, 2010, vol. 17, issue 2, 151-173

Abstract: We investigate the relation between institutional ownership, financial health, and the market valuation weights on earnings and the book value of equity. We find that the valuation weight on earnings (book value) increases (decreases) with the level of institutional ownership for profit firms, while that on book value increases with the level of institutional ownership for loss firms. This valuation effect is not subsumed by incorporating current measures of financial health and is mainly driven by institutions with long investment horizons and monitoring incentives. We conclude that the institutional valuation effect is consistent with institutions playing a positive governance role.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2010.9720858 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:17:y:2010:i:2:p:151-173

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2010.9720858

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().