Do UK institutional shareholders monitor their investee firms?
Goergen, Marc , Renneboog, Luc and Zhang, Chendi. (2008) Do UK institutional shareholders monitor their investee firms? Journal of Corporate Law Studies, 8 (1). pp. 39-56. ISSN 1473-5970Full text not available from this repository.
Official URL: http://www.tandfonline.com/doi/abs/10.1080/1473597...
As institutional investors are the largest shareholders in most listed UK firms, one expects them to monitor the
firms they invest in. However, there is mounting empirical evidence which suggests that they do not perform any
monitoring. This paper provides a new test on whether UK institutional investors engage in monitoring. The test
consists of an event study on directors’ trades. If institutional shareholders act as monitors, their monitoring activities convey new information about a firm’s future value to other outside shareholders and reduce the
informational asymmetry between the managers and the market. As a result, directors’ trades convey less information to the market, and the stock price reaction is weaker. However, our results show that institutional shareholders do not have any significant impact on the stock price reaction which stands in marked contrast with the impact that families, individuals and other firms have on stock prices.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HG Finance|
|Divisions:||Faculty of Social Sciences > Warwick Business School > Finance Group
Faculty of Social Sciences > Warwick Business School
|Journal or Publication Title:||Journal of Corporate Law Studies|
|Publisher:||Hart Publishing Ltd.|
|Official Date:||April 2008|
|Number of Pages:||18|
|Page Range:||pp. 39-56|
|Access rights to Published version:||Restricted or Subscription Access|
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