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

Academy of Management Journal, Vol. 53, pp. 723-742, 2010

Mays Business School Research Paper No. 2012-21

21 Pages Posted: 1 Feb 2012

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: 2010

Abstract

This research extends agency theory by exploring the influence of varied, competing, principal interests on executive actions. Findings reveal that ownership of a firm by dedicated institutional investors, who hold concentrated portfolios over time, is positively associated with firm use of strategic competitive actions. Ownership by transient institutional investors, who hold broad portfolios and make frequent trades based on current earnings, is negatively associated with strategic competitive actions and positively associated with tactical ones. Appreciable ownership of the same firm by these two classes of investors influences both strategic and tactical competitive actions. These results have broad implications for executives, investors, and policy makers.

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 (2010). Academy of Management Journal, Vol. 53, pp. 723-742, 2010 ; Mays Business School Research Paper No. 2012-21. Available at SSRN: https://ssrn.com/abstract=1995776

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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