Ratio Working Papers,
The Ratio Institute

Abstract: This paper examines how institutional investors influence investment decisions and returns on investment. To measure investment performance we used a measure of marginal q which measures the ratio of the investment returns to cost of capital. Institutional owners are found to have had a positive effect on performance, with a marginally diminishing effect of institutional ownership concentration. We used longitudinal data on Swedish firms for the period 1999-2005, during which their ownership structure underwent dramatic changes: Institutional investors increased their ownership share, while ownership by Swedish households decreased. However, controlling owners - often founding families - remained in control by resorting to extensive use of dual-class shares, control rights, which separate from cash-flow. This was an important determinant of firm performance, eradicating the positive influence of institutional ownership.

Keywords: Corporate governance; institutions; ownership; performance; Tobin’s q; marginal q

JEL-codes: C23; G30; L25

30 pages, July 30, 2013

Full text files

pob_je_dw_institutional_ownership_wp208.pdf  

Download statistics

• The Ratio Institute
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Martin Korpi ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:ratioi:0208This page generated on 2024-09-13 22:16:55.