Institutional Investors Networks and Firm Value

44 Pages Posted: 22 Jul 2015 Last revised: 1 Feb 2017

See all articles by Emanuele Bajo

Emanuele Bajo

University of Bologna - Department of Economics

Ettore Croci

Catholic University of the Sacred Heart of Milan

Nicoletta Marinelli

University of Macerata - Department of Economics and Law

Date Written: January 31, 2017

Abstract

This paper investigates the role of institutional investor networks on firm value. Using US data over the period 2001-2013, we document that block-holdings from more central institutional investors (i.e. with larger co-ownership ties) enhance firm value more than those held by other investors. Our findings are consistent with the view that central institutional investors provide a certification benefit to the firm. On the opposite, we do not find evidence that the increase in value is due to monitoring, advisory, or information cost effects. The documented effects are robust to alternative specifications of network centrality and to endogeneity concerns.

Keywords: Institutional Ownership, Firm value, Social Network, Blockholders

JEL Classification: G32, G34

Suggested Citation

Bajo, Emanuele and Croci, Ettore and Marinelli, Nicoletta, Institutional Investors Networks and Firm Value (January 31, 2017). Available at SSRN: https://ssrn.com/abstract=2633541 or http://dx.doi.org/10.2139/ssrn.2633541

Emanuele Bajo

University of Bologna - Department of Economics ( email )

Bologna
Italy

Ettore Croci

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Nicoletta Marinelli (Contact Author)

University of Macerata - Department of Economics and Law ( email )

Piazza Strambi, 1
Macerata, Macerata 62100
Italy

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