Do institutional blockholders influence corporate investment? Evidence from emerging markets

Roberto Alvarez, Mauricio Jara Bertin and Carlos Pombo

Working Papers from University of Chile, Department of Economics

Abstract: This paper examines the relation between firm investment ratios and institutional blockholders for a sample of 6,300 publicly traded firms in 16 large emerging markets for the 2004–2016 period. Results show that independent, long-term, and local institutional investors boost investment ratios, which is consistent with the monitoring role and blockholder voice intervention hypotheses. The presence of institutional blockholders, regardless of their monitoring involvement, reduces firmcash flow sensitivity ratios and thus reduces firms’ financial constraints. Minority institutional investors complement the positive effect of blockholders investors. However, the effect on financial constraints decreases as the quality of the country's institutions increases.

Pages: 48 pages
Date: 2018-09
New Economics Papers: this item is included in nep-bec and nep-sbm
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Citations: View citations in EconPapers (33)

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Journal Article: Do institutional blockholders influence corporate investment? Evidence from emerging markets (2018)
Working Paper: Do institutional blockholders influence corporate investment? Evidence from emerging markets (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:udc:wpaper:wp469

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