Do institutional investors unbind firm financial constraints? Evidence from emerging markets

Roberto Alvarez, Mauricio Jara-Bertín () and Carlos Pombo
Authors registered in the RePEc Author Service: Mauricio Jara Bertin

No 15114, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: Using firm-level information for 11 large emerging economies for the 2003-2014 period, this article analyses the impact of firm investment ratio depending on the presence of institutional ownership and the effects of institutional investor heterogeneity on firm financial constraints. Results show that the presence of institutional ownership reduces firm cash flow sensitivity for restricted samples using size and the Kaplan and Zingales index. Investor heterogeneity regressions show that independent and foreign institutional investors reduce firm financial constraints explained by direct investor activism, lower monitoring costs and better corporate governance in particular across small and medium-size firms.

Keywords: Institutional Investors; Corporate Governance; Financial Constraints; Emerging Markets (search for similar items in EconPapers)
JEL-codes: C20 G00 G20 G30 (search for similar items in EconPapers)
Pages: 49
Date: 2016-09-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:015114

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