Selection or Influence? Institutional Investors and Corporate Acquisitions

47 Pages Posted: 30 Apr 2008

See all articles by Lily Xiaoli Qiu

Lily Xiaoli Qiu

Brown University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2008

Abstract

This paper shows that the presence of large public pension fund shareholders particularly reduces ex ante bad acquisitions. When firms with large public pension fund presence do acquire other firms, they perform relatively better in the long-run. Other institutional investors have either the opposite effect or no effect. To establish the direction of causality between institutional ownership and observed corporate merger and acquisition decisions, it is crucial to identify the sources of exogenous variations in institutional ownerships. This paper introduces two instrumental variables, one of which borrows the concept of a "Bartik" instrument from the labor economics literature.

Keywords: Corporate Governance, Institutional Investors, Mergers and Acquisitions

JEL Classification: G2, G34

Suggested Citation

Qiu, Lily Xiaoli, Selection or Influence? Institutional Investors and Corporate Acquisitions (April 1, 2008). Available at SSRN: https://ssrn.com/abstract=1126430 or http://dx.doi.org/10.2139/ssrn.1126430

Lily Xiaoli Qiu (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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