Marching to the Beat of Different Drummers: The Influence of Institutional Owners on Competitive Actions

Academy of Management Journal, 2009

Posted: 29 Jul 2009

See all articles by Brian L. Connelly

Brian L. Connelly

Auburn University

Laszlo Tihanyi

Texas A&M University - Department of Management

S. Trevis Certo

Arizona State University (ASU)

Michael A. Hitt

Texas A&M University - Department of Management; Texas Christian University

Multiple version iconThere are 2 versions of this paper

Date Written: July 2009

Abstract

This research extends agency theory by exploring the influence of diverse, and competing, principal interests on executive actions. Findings reveal that dedicated institutional investors, who hold concentrated portfolios over time, are positively associated with strategic competitive actions. Transient institutional investors, who hold diverse portfolios and trade frequently based on current earnings, are negatively associated with strategic and positively associated with tactical competitive actions. When these two classes of investors own appreciable shares of the same firm, they interact with each other to influence strategic and tactical competitive actions. These results have broad implications for executives, investors, and policymakers.

Keywords: institutional investors, ownership, competitive dynamics

Suggested Citation

Connelly, Brian L. and Tihanyi, Laszlo and Certo, S. Trevis and Hitt, Michael A., Marching to the Beat of Different Drummers: The Influence of Institutional Owners on Competitive Actions (July 2009). Academy of Management Journal, 2009. Available at SSRN: https://ssrn.com/abstract=1440479

Brian L. Connelly (Contact Author)

Auburn University ( email )

Auburn, AL 36849
United States
344-844-6515 (Phone)

Laszlo Tihanyi

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

S. Trevis Certo

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Michael A. Hitt

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-458-3393 (Phone)

Texas Christian University ( email )

Fort Worth, TX 76129
United States

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