Institutional presence

Institutional presence

We propose an Institutional Presence (IP) measure to capture the latent role of non-owner institutional investors who nevertheless may be observing a firm. We employ this measure to examine whether the ‘presence’ of institutional investors reduces information asymmetry in the market. Firms in areas...

Full description

Saved in:
Bibliographic Details
Main Authors: SULAEMAN, Johan, WEI, Chi Shen
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2013
Subjects:
institutional investors
non-shareholders
liquidity
cost of capital
Finance and Financial Management
Portfolio and Security Analysis
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/6778
https://ink.library.smu.edu.sg/context/lkcsb_research/article/7777/viewcontent/SSRN_id2373506.pdf
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Singapore Management University
Language: English
Description
Summary:We propose an Institutional Presence (IP) measure to capture the latent role of non-owner institutional investors who nevertheless may be observing a firm. We employ this measure to examine whether the ‘presence’ of institutional investors reduces information asymmetry in the market. Firms in areas with high institutional presence experience higher liquidity, faster information incorporation, lower costs of equity capital, and less financing frictions relative to firms in low IP areas. The results hold after controlling for firm and geographical characteristics including institutional ownership and urban locality. Our findings indicate that being in the presence of institutional investors brings tangible benefits.

Similar Items