IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v11y2021i4p21582440211050400.html
   My bibliography  Save this article

Influencing Factors of Institutional Investors Shareholding Stability

Author

Listed:
  • Peng Han
  • Feng Niu
  • Wunhong Su

Abstract

The premise for institutional investors to participate in firm innovation governance and promote firm innovation’s positive role is that institutional investors have specific decision-making power and are willing to participate in firm innovation governance. Therefore, the influencing factors of institutional investment shareholding stability are an important issue. This study investigates the impact of business connection, risk preference, policy factors, market factors, and firm factors on institutional investors’ shareholding stability using regressional analysis based on the samples of Chinese A-share listed firms from 2014 to 2017. The main findings show that institutional investors with higher business connections, risk preferences, and performance ranking intensity have poor shareholding stability. The reform has significant investment constraints on non-risk preference institutional investors but has insufficient investment constraints on risk preference institutional investors. The substitution and interaction between firm factors and the natural endowment of institutional investors occur alternately. This study’s results provide important policy implications to strengthen related business supervision between institutional investors and shareholding firms. The policy implications include relaxing the investment proportion restriction and establishing a market-oriented performance ranking and institutional investors’ evaluation mechanism.

Suggested Citation

  • Peng Han & Feng Niu & Wunhong Su, 2021. "Influencing Factors of Institutional Investors Shareholding Stability," SAGE Open, , vol. 11(4), pages 21582440211, October.
    • Handle: RePEc:sae:sagope:v:11:y:2021:i:4:p:21582440211050400
    DOI: 10.1177/21582440211050400
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440211050400
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440211050400?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Najah Attig & Sean Cleary & Sadok El Ghoul & Omrane Guedhami, 2013. "Institutional Investment Horizons and the Cost of Equity Capital," Financial Management, Financial Management Association International, vol. 42(2), pages 441-477, June.
    2. Xuemin (Sterling) Yan & Zhe Zhang, 2009. "Institutional Investors and Equity Returns: Are Short-term Institutions Better Informed?," Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 893-924, February.
    3. Koh, Ping-Sheng, 2007. "Institutional investor type, earnings management and benchmark beaters," Journal of Accounting and Public Policy, Elsevier, vol. 26(3), pages 267-299.
    4. Vicentiu Covrig & Sie Ting Lau & Lilian Ng, 2006. "Do domestic and foreign fund managers have similar preferences for stock characteristics? A cross-country analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(3), pages 407-429, May.
    5. Hamid Sakaki & Dave Jackson & Surendranath Jory, 2017. "Institutional ownership stability and real earnings management," Review of Quantitative Finance and Accounting, Springer, vol. 49(1), pages 227-244, July.
    6. Jones, Jj, 1991. "Earnings Management During Import Relief Investigations," Journal of Accounting Research, Wiley Blackwell, vol. 29(2), pages 193-228.
    7. Merton, Robert C, 1987. "A Simple Model of Capital Market Equilibrium with Incomplete Information," Journal of Finance, American Finance Association, vol. 42(3), pages 483-510, July.
    8. Brian J. Bushee, 2001. "Do Institutional Investors Prefer Near†Term Earnings over Long†Run Value?," Contemporary Accounting Research, John Wiley & Sons, vol. 18(2), pages 207-246, June.
    9. Autore, Don M. & Kovacs, Tunde, 2014. "Investor recognition and seasoned equity offers," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 216-233.
    10. Huang, Wei & Paul, Donna L., 2017. "Institutional holdings, investment opportunities and dividend policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 152-161.
    11. Lin, Fengyi & Wu, Chung-Min & Fang, Tzu-Yi & Wun, Jheng-Ci, 2014. "The relations among accounting conservatism, institutional investors and earnings manipulation," Economic Modelling, Elsevier, vol. 37(C), pages 164-174.
    12. Andrew Bird & Stephen A. Karolyi, 2016. "Do Institutional Investors Demand Public Disclosure?," Review of Financial Studies, Society for Financial Studies, vol. 29(12), pages 3245-3277.
    13. Del Guercio, Diane, 1996. "The distorting effect of the prudent-man laws on institutional equity investments," Journal of Financial Economics, Elsevier, vol. 40(1), pages 31-62, January.
    14. Cao, Jie & Han, Bing & Wang, Qinghai, 2017. "Institutional Investment Constraints and Stock Prices," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 52(2), pages 465-489, April.
    15. Helwege, Jean & Intintoli, Vincent J. & Zhang, Andrew, 2012. "Voting with their feet or activism? Institutional investors’ impact on CEO turnover," Journal of Corporate Finance, Elsevier, vol. 18(1), pages 22-37.
    16. repec:oup:revfin:v:29:y:2016:i:12:p:3245-3277. is not listed on IDEAS
    17. Borochin, Paul & Yang, Jie, 2017. "The effects of institutional investor objectives on firm valuation and governance," Journal of Financial Economics, Elsevier, vol. 126(1), pages 171-199.
    18. Brickley, James A. & Lease, Ronald C. & Smith, Clifford Jr., 1988. "Ownership structure and voting on antitakeover amendments," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 267-291, January.
    19. Lois Mahoney & Robin W. Roberts, 2007. "Corporate social performance, financial performance and institutional ownership in Canadian firms," Accounting Forum, Taylor & Francis Journals, vol. 31(3), pages 233-253, September.
    20. Piccioni, Joao Luiz & Sheng, Hsia Hua & Lora, Mayra Ivanoff, 2012. "Mutual fund managers stock preferences in Latin America," International Review of Financial Analysis, Elsevier, vol. 24(C), pages 38-47.
    21. Falkenstein, Eric G, 1996. "Preferences for Stock Characteristics as Revealed by Mutual Fund Portfolio Holdings," Journal of Finance, American Finance Association, vol. 51(1), pages 111-135, March.
    22. Bodnaruk, Andriy & Ostberg, Per, 2009. "Does investor recognition predict returns?," Journal of Financial Economics, Elsevier, vol. 91(2), pages 208-226, February.
    23. Jain, Ravi, 2007. "Institutional and individual investor preferences for dividends and share repurchases," Journal of Economics and Business, Elsevier, vol. 59(5), pages 406-429.
    24. Chen, Xia & Harford, Jarrad & Li, Kai, 2007. "Monitoring: Which institutions matter?," Journal of Financial Economics, Elsevier, vol. 86(2), pages 279-305, November.
    25. Aggarwal, Reena & Klapper, Leora & Wysocki, Peter D., 2005. "Portfolio preferences of foreign institutional investors," Journal of Banking & Finance, Elsevier, vol. 29(12), pages 2919-2946, December.
    26. Attig, Najah & Cleary, Sean & El Ghoul, Sadok & Guedhami, Omrane, 2012. "Institutional investment horizon and investment–cash flow sensitivity," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1164-1180.
    27. Green, T. Clifton & Jame, Russell, 2013. "Company name fluency, investor recognition, and firm value," Journal of Financial Economics, Elsevier, vol. 109(3), pages 813-834.
    28. Jeffery S. Abarbanell & Brian J. Bushee & Jana Smith Raedy, 2003. "Institutional Investor Preferences and Price Pressure: The Case of Corporate Spin-Offs," The Journal of Business, University of Chicago Press, vol. 76(2), pages 233-262, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amina Rizwan & Faisal Mustafa, 2022. "Fintech Attaining Sustainable Development: An Investor Perspective of Crowdfunding Platforms in a Developing Country," Sustainability, MDPI, vol. 14(12), pages 1-17, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kałdoński, Michał & Jewartowski, Tomasz & Mizerka, Jacek, 2020. "Capital market pressure, real earnings management, and institutional ownership stability - Evidence from Poland," International Review of Financial Analysis, Elsevier, vol. 71(C).
    2. Ferreira, Miguel A. & Matos, Pedro, 2008. "The colors of investors' money: The role of institutional investors around the world," Journal of Financial Economics, Elsevier, vol. 88(3), pages 499-533, June.
    3. Boubaker, Sabri & Chourou, Lamia & Saadi, Samir & Zhong, Ligang, 2019. "Does institutional investor horizon influence US corporate financing decisions?," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 382-394.
    4. Abdioglu, Nida & Bamiatzi, Vassiliki & Cavusgil, S.Tamer & Khurshed, Arif & Stathopoulos, Konstantinos, 2015. "Information asymmetry, disclosure and foreign institutional investment: An empirical investigation of the impact of the Sarbanes-Oxley Act," International Business Review, Elsevier, vol. 24(5), pages 902-915.
    5. Driss, Hamdi & Drobetz, Wolfgang & El Ghoul, Sadok & Guedhami, Omrane, 2021. "Institutional investment horizons, corporate governance, and credit ratings: International evidence," Journal of Corporate Finance, Elsevier, vol. 67(C).
    6. Simon Döring & Wolfgang Drobetz & Sadok El Ghoul & Omrane Guedhami & Henning Schröder, 2021. "Institutional investment horizons and firm valuation around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(2), pages 212-244, March.
    7. Yin, Chao & Ward, Charles & Tsolacos, Sotiris, 2018. "Motivated monitoring: The importance of the institutional investment horizon," International Review of Financial Analysis, Elsevier, vol. 60(C), pages 197-212.
    8. Kim, Hyun-Dong & Kim, Yura & Mantecon, Tomas & Song, Kyojik Roy, 2019. "Short-term institutional investors and agency costs of debt," Journal of Business Research, Elsevier, vol. 95(C), pages 195-210.
    9. Boubakri, Narjess & Cosset, Jean-Claude & Grira, Jocelyn, 2016. "Sovereign wealth funds targets selection: A comparison with pension funds," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 42(C), pages 60-76.
    10. Guha Deb, Soumya, 2018. "Institutional Investors and firm characteristics: New evidence from India," Research in International Business and Finance, Elsevier, vol. 46(C), pages 30-42.
    11. Ryan P. McDonough, 2023. "Corporate communication and shareholder base retention: evidence from spin-offs," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1283-1327, May.
    12. Baig, Ahmed & DeLisle, R. Jared & Zaynutdinova, Gulnara R., 2022. "Index mutual fund ownership and financial reporting quality," Research in International Business and Finance, Elsevier, vol. 62(C).
    13. Kim, Kyung Soon & Chung, Chune Young & Liu, Chang, 2020. "Is institutional monitoring time-varying? Evidence from the Korean market," Finance Research Letters, Elsevier, vol. 32(C).
    14. Ching-Lung Chen & Chung-Yu Chen, 2018. "Do Weak Internal Controls Affect Institutional Ownership Decisions?," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 21(03), pages 1-37, September.
    15. Nose, Yoshiaki & Miyagawa, Hisao & Ito, Akitoshi, 2021. "How do firms attract the attention of individual investors? Shareholder perks and financial visibility," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    16. Chen, Ching-Lung & Weng, Pei-Yu & Chien, Chu-Yang, 2018. "Qualified foreign institutional investor ownership deregulation and the restatement of financial reports --- empirical findings from Taiwan," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 465-485.
    17. Rizzo, Emanuele, 2018. "Essays on corporate governance and the impact of regulation on financial markets," Other publications TiSEM b5158260-ea13-4763-b992-6, Tilburg University, School of Economics and Management.
    18. Doina Chichernea & Collin Gilstrap & Kershen Huang & Alex Petkevich, 2019. "Who Reacts to News?," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 9(01), pages 1-43, March.
    19. Elyas Elyasiani & Yuan Wen & Rongrong Zhang, 2017. "Institutional Ownership And Earning Management By Bank Holding Companies," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 40(2), pages 147-178, June.
    20. Edmans, Alex & Holderness, Clifford, 2016. "Blockholders: A Survey of Theory and Evidence," CEPR Discussion Papers 11442, C.E.P.R. Discussion Papers.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:11:y:2021:i:4:p:21582440211050400. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.