19 Pages Posted: 7 Mar 2012
Date Written: March 6, 2012
Does institutional ownership affect firm value when new proxy access rules are proposed? This paper analyzes whether the level and composition of institutional investor ownership impacts firm value on days when the US SEC proxy access proposals are announced. Using event-study methodology, the paper finds evidence indicating the number of institutional investors with significant corporate ownership has a small positive effect on firm value. When public pension funds are differentiated from other types of institutional investors, results show that public pension funds negatively impact stock value returns, while other types of institutional investors have a positive effect. Results are similar for institutional investors with smaller ownership stakes.
Keywords: Corporate governance, institutional shareholder, pension fund ownership
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