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http://ssrn.com/abstract=1409222
 
 

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Corporate Governance and Institutional Ownership


Kee H. Chung


State University of New York at Buffalo - School of Management

Hao Zhang


Rochester Institute of Technology (RIT) - Saunders College of Business

May 23, 2009

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
In this study we examine the relation between corporate governance and institutional ownership. Our empirical results show that the fraction of a company’s shares that are held by institutional investors increases with the quality of its governance structure. In a similar vein, we show that the proportion of institutions that hold a firm’s shares increases with its governance quality. Our results are robust to different estimation methods and alternative model specifications. These results are consistent with the conjecture that institutional investors gravitate to stocks of companies with good governance structure to meet fiduciary responsibility as well as to minimize monitoring and exit costs.

Number of Pages in PDF File: 53

Keywords: Corporate governance, Institutional ownership, Fiduciary responsibility, Monitoring costs, Liquidity, Trading costs

JEL Classification: G20, G30

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Date posted: May 25, 2009  

Suggested Citation

Chung, Kee H. and Zhang, Hao, Corporate Governance and Institutional Ownership (May 23, 2009). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1409222

Contact Information

Kee H. Chung (Contact Author)
State University of New York at Buffalo - School of Management ( email )
Buffalo, NY 14260
United States
716-645-3262 (Phone)
716-645-3823 (Fax)
HOME PAGE: http://mgt.buffalo.edu/home/faculty/academic/finance/faculty/keechung
Hao Zhang
Rochester Institute of Technology (RIT) - Saunders College of Business ( email )
105 Lomb Memorial Dr.
Rochester, NY 14623
United States
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