Institutional investors’ ownership stability and their investee firms’ equity mispricing

Hamid Sakaki, Surendranath Jory and Dave Jackson

The North American Journal of Economics and Finance, 2021, vol. 57, issue C

Abstract: This study examines the impact of institutional investors' equity ownership stability and their investment horizon to determine the impact on their investee firms' equity mispricing. Mispricing represents the difference between a firm’s market and fundamental values. We treat institutional investors as a heterogenous group, i.e., dedicated, transient, or quasi-indexer as defined by Bushee (1998, 2001) since their categorization determines their trading strategy. Higher institutional ownership, higher stability in institutional investors' equity ownership, and institutional investors classified as long-term are all associated with lower equity mispricing at investee firms.

Keywords: Institutional investors; Equity mispricing (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000693

DOI: 10.1016/j.najef.2021.101440

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