Do Institutional Blockholders Influence Corporate Investment? Evidence from Emerging Markets

43 Pages Posted: 5 Oct 2017

See all articles by Roberto Alvarez

Roberto Alvarez

University of Chile - Department of Economics

Mauricio Jara-Bertin

University of Chile - Business School

Carlos Pombo

Universidad de los Andes, Colombia - School of Management

Date Written: October 4, 2017

Abstract

This paper examines the relation between firm investment ratios and institutional blockholder ownership for a sample of 6,300 publicly traded firms of 16 large emerging markets for the 2005-2014 period. Results show that independent, long-term, and local institutional investors boost investment ratios, consistent with the monitoring role and blockholder voice intervention hypotheses. The presence of institutional blockholders, regardless their monitoring involvement, reduces firm cash flow sensitivity ratios and thus decreasing firms’ financial constraints.

Keywords: Institutional Investors, Corporate Investment, Financial Constraints, Corporate Governance, Emerging Markets

JEL Classification: C20, G00, G20, G30

Suggested Citation

Alvarez, Roberto and Jara-Bertin, Mauricio Alejandro and Pombo, Carlos, Do Institutional Blockholders Influence Corporate Investment? Evidence from Emerging Markets (October 4, 2017). Documento CEDE No. 2017-57, Available at SSRN: https://ssrn.com/abstract=3048016 or http://dx.doi.org/10.2139/ssrn.3048016

Roberto Alvarez (Contact Author)

University of Chile - Department of Economics ( email )

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

Mauricio Alejandro Jara-Bertin

University of Chile - Business School ( email )

Diagonal Paraguay 257
Santiago, Chile
Chile

Carlos Pombo

Universidad de los Andes, Colombia - School of Management ( email )

Carrera Primera # 18A-12
Bogotá
Colombia
571-3394949 (Phone)

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