Do exogenous changes in passive institutional ownership affect corporate governance and firm value?

• 成果类型: Article
• 署名作者: Schmidt, Cornelius; Fahlenbrach, Ruediger
• 署名单位: Norwegian School of Economics (NHH); Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne; Swiss Finance Institute (SFI)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.01.005
• 发表日期: 2017
• 页码: 285-306
• 关键词: CORPORATE GOVERNANCE; INSTITUTIONAL OWNERSHIP; monitoring; Index reconstitutions

摘要

We investigate whether corporations and their executives react to an exogenous change in passive institutional ownership and alter their corporate governance structure. We find that exogenous increases in passive ownership lead to increases in CEO power and fewer new independent director appointments. Consistent with these changes not being beneficial for shareholders, we observe negative announcement returns to the appointments of new independent directors. We also show that firms carry out worse mergers and acquisitions after exogenous increases in passive ownership. These results suggest that the changed ownership structure causes higher agency costs. (C) 2017 Elsevier B.V. All rights reserved.