Institutional Ownership and Firms’ Thrust to Compete
34 Pages Posted: 12 Feb 2018 Last revised: 15 Apr 2019
Date Written: April 14, 2019
A firm’s thrust to compete, as an attribute of corporate culture, captures the relative importance of corporate values that propel a firm to achieve superior financial performance by emphasizing organizational effectiveness, fast response to external information, and enhanced competitiveness. Using this attribute of corporate culture, this study provides causal evidence that institutional investors’ preferences significantly affect firms’ thrust to compete. In particular, the results show that transient institutional ownership intensifies, while dedicated institutional ownership diminishes, a firm’s thrust to compete. These findings inform the recent literature that considers the behind‐the‐scenes intervention from institutional investors relating to the corporate governance and organizational climate. Further, our inferences have policy implications, since they identify thrust to compete as a channel through which institutional investors intervene to affect firms’ operating philosophy and decision-making.
Keywords: Thrust to compete; Corporate culture; Institutional ownership; Transient investors; Dedicated investors
JEL Classification: G20, G32, G34, G38, M48
Suggested Citation: Suggested Citation