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The Influence of Insiders and Institutional Investors on Firm Performance

Author

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  • Hsiu-I Ting

    (Department of Money and Banking, National Kaohsiung First University of Science and Technology, No. 1, University Rd., Yanchao Dist., Kaohsiung City 824, Taiwan, R.O.C.)

Abstract

Guided by the evidence that insiders and institutional investors are better informed, I comprehensively investigate the trading behavior and ownership of insiders and institutional investors in Taiwan in an attempt to differentiate between the two types of investors. Insiders gain profits from their filing of selling shareholdings and institutional investors acquire abnormal returns from block trades. Insider and institutional ownership both show positive effects on performance. Firms with high institutional ownership have higher performance, but not lower volatility. The results remain by considering the endogeneity issue and alternative measures of performance. These findings provide evidence that the efficient monitoring effect is more significant than the convergence of interest effect.

Suggested Citation

  • Hsiu-I Ting, 2013. "The Influence of Insiders and Institutional Investors on Firm Performance," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 16(04), pages 1-38.
    • Handle: RePEc:wsi:rpbfmp:v:16:y:2013:i:04:n:s0219091513500276
    DOI: 10.1142/S0219091513500276
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    More about this item

    Keywords

    Insiders; institutional investors; ownership; efficient monitoring hypothesis; convergence of interest hypothesis; G30; G32; G34;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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