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Institutional investor heterogeneity and firm valuation: Evidence from Latin America

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  • De-la-Hoz, Maria Camila
  • Pombo, Carlos

Abstract

This article analyses how the corporate valuation of Latin American firms is affected by the presence of a blockholder institutional investor. The study uses a data set of 562 firms from six Latin American countries for the 1997–2011 period. We found that the presence of an institutional investor has a positive effect of 8% on firm value, which increases to 21% for the cases where there is blockholder coalition with an institutional investor. After dividing the sample by investor type, we found that independent institutional ownership implies a positive premium on firms' Tobin's Q, while the presence of a grey investor has a negative effect on firm valuation.

Suggested Citation

  • De-la-Hoz, Maria Camila & Pombo, Carlos, 2016. "Institutional investor heterogeneity and firm valuation: Evidence from Latin America," Emerging Markets Review, Elsevier, vol. 26(C), pages 197-221.
  • Handle: RePEc:eee:ememar:v:26:y:2016:i:c:p:197-221
    DOI: 10.1016/j.ememar.2015.12.001
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    Cited by:

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    3. Maria Camila De-La-Hoz & Carlos Pombo & Rodrigo Taborda, 2018. "Does board diversity affect institutional investor preferences? Evidence from Latin America," Documentos CEDE 15991, Universidad de los Andes, Facultad de Economía, CEDE.
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    More about this item

    Keywords

    Institutional investors; Firm valuation; Latin America;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean

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