Institutional Presence

76 Pages Posted: 2 Jan 2014 Last revised: 9 Jul 2019

See all articles by Johan Sulaeman

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance

Kelvin Jui Keng Tan

University of Queensland - Business School; Financial Research Network (FIRN)

Chishen Wei

Singapore Management University - Lee Kong Chian School of Business

Date Written: July 6, 2019

Abstract

We show that institutional presence — measured as the equity holdings of money managers located in an urban area — is associated with higher stock liquidity and lower commonality in liquidity of nearby firms. These patterns become stronger during episodes of market stress. Our findings are not due to firm characteristics nor regional urban features, and are distinct from the effects of institutional ownership. We consider a causal interpretation by exploiting an exogenous shock to institutional presence. Our results suggest that incorporating institutional presence provides a more complete picture of how institutional investors shape stock liquidity.

Keywords: institutional investors, liquidity, commonality in liquidity

JEL Classification: G12, G14, G23

Suggested Citation

Sulaeman, Johan and Tan, Kelvin Jui Keng and Wei, Chishen, Institutional Presence (July 6, 2019). Available at SSRN: https://ssrn.com/abstract=2373506 or http://dx.doi.org/10.2139/ssrn.2373506

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

Kelvin Jui Keng Tan

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Chishen Wei (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore
Singapore

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