Institutional investors and firm performance: Evidence from IPOs

Allen Michel, Jacob Oded and Israel Shaked

The North American Journal of Economics and Finance, 2020, vol. 51, issue C

Abstract: We investigate the post-IPO evolution of institutional investor holdings and the manner in which operating performance is related to these holdings. During the first year after the IPO, average institutional holdings increase from 24% to 36% of shares outstanding and stabilize at about 42% by the end of the second year. We document that post-IPO operating performance is positively related to institutional holdings, but this relation subsides in the third year after the IPO. Overall, our findings indicate that institutional ownership is a valid indicator of the firm’s operating performance in its initial years as a public company.

Keywords: IPO; Institutional investors; Ownership structure; Operating performance; Equity issuance; Agency (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:51:y:2020:i:c:s1062940819300427

DOI: 10.1016/j.najef.2019.101099

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