Changes in Institutional Ownership: Liquidity, Activism, and Firm Performance

49 Pages Posted: 15 Mar 2012 Last revised: 9 Oct 2013

See all articles by Wady Haddaji

Wady Haddaji

Bloomberg L.P.; University of Amsterdam

Jie Yang

Board of Governors of the Federal Reserve System

Date Written: September 28, 2013

Abstract

We document a negative (positive) relationship between firm performance and changes in the ownership of large (small) institutional investors. Small investors "exit'' while blockholders increase their holdings following poor performance. We find evidence that large investors increase ownership following poor performance to protect the value of initial holdings and to benefit from undertaking value-enhancing interventions. We observe that poorly performing firms in which blockholders increase their ownership experience more aggressive restructuring policies than firms in which blockholders reduce their ownership. Finally, we find that firms with passive investors recover faster than firms with active investors following poor performance.

JEL Classification: G30, G32, G34

Suggested Citation

Haddaji, Wady and Yang, Jie, Changes in Institutional Ownership: Liquidity, Activism, and Firm Performance (September 28, 2013). Available at SSRN: https://ssrn.com/abstract=2022378 or http://dx.doi.org/10.2139/ssrn.2022378

Wady Haddaji

Bloomberg L.P. ( email )

731 Lexington Avenue
New York, NY 10022
United States

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

HOME PAGE: http://fee.uva.nl/pp/whaddaji

Jie Yang (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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