Institutional Ownership

Working Paper

Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy

Index funds own an increasingly large proportion of American public companies, currently more than one fifth and steadily growing. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies—...Read more

Lucian Bebchuk
Scott Hirst
27 November 2018

The Firms’ Reaction to Changes in the Governance Preferences of Active Institutional Owners

In November 2012, Norway’s sovereign wealth fund (NBIM) unexpectedly announced that it would foster better corporate governance practices in its portfolio firms by articulating specific governance expectations. We use this sudden change in...Read more

Ruth V. Aguilera
Vicente J. Bermejo
Javier Capapé
Vicente Cuñat
28 August 2019

News

Video

Prof. Pedro Matos (Associate Professor of Business Administration, University of Virginia) presents his paper on "Are Foreign Investors Locusts? The Long-Term Effects of Foreign Institutional Ownership" at the 2016 GCGC Conference in Stockholm. Discussion of the paper is then presented by Prof. Giovanna Nicodano (Professor of Financial Economics, Università di Torino).

15 September 2019

Presentation

This paper challenges the view that foreign investors lead firms to adopt a short-term orientation and forgo long-term investment. Using a comprehensive sample of publicly listed firms in 30 countries over the 2001-2010 period, we find instead that greater foreign institutional ownership fosters long-term investment in tangible, intangible, and human capital. Foreign institutional ownership also leads to significant increases in innovation output.

September 15 2019