Institutional Investors Networks and Firm Value
44 Pages Posted: 22 Jul 2015 Last revised: 1 Feb 2017
Date Written: January 31, 2017
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: Suggested Citation