Stewardship Code, Institutional Investors, and Firm Value: International Evidence

34 Pages Posted: 11 Oct 2019

See all articles by Yutaro Shiraishi

Yutaro Shiraishi

Tokyo Institute of Technology

Naoshi Ikeda

Tokyo Institute of Technology

Yasuhiro Arikawa

Waseda University - Graduate School of Business and Finance

Kotaro Inoue

School fo Engineering, Tokyo Institute of Technology

Date Written: September 1, 2019

Abstract

This study investigates whether the stewardship code mitigates the free-rider problem of institutional investors. We construct panel data of listed firms in 56 countries and examine the effects of the introduction of stewardship codes in 13 countries using a difference-in-differences approach. Our results show that the introduction of the stewardship code in a country increases the value of firms with high institutional ownership. It also mitigates the free cash flow problem of the portfolio firms with low investment opportunities. To the best of our knowledge, this is the first study that provides international evidence that stewardship codes are effective in enhancing monitoring by institutional investors.

Keywords: Corporate Governance, Institutional Investor, Stewardship Code

JEL Classification: G18, G23, G32, G34, G35

Suggested Citation

Shiraishi, Yutaro and Ikeda, Naoshi and Arikawa, Yasuhiro and Inoue, Kotaro, Stewardship Code, Institutional Investors, and Firm Value: International Evidence (September 1, 2019). Available at SSRN: https://ssrn.com/abstract=3462453 or http://dx.doi.org/10.2139/ssrn.3462453

Yutaro Shiraishi

Tokyo Institute of Technology ( email )

2-12-1 O-okayama, Meguro-ku
Tokyo 152-8550, 52-8552
Japan

Naoshi Ikeda

Tokyo Institute of Technology ( email )

2-12-1 O-okayama, Meguro-ku
Tokyo 152-8550, 52-8552
Japan

Yasuhiro Arikawa

Waseda University - Graduate School of Business and Finance ( email )

Bldg.26, 1-6-1,
Nishiwaseda
Shinjuku-ku, Tokyo, 1698050
Japan

Kotaro Inoue (Contact Author)

School fo Engineering, Tokyo Institute of Technology ( email )

2-12-1 Ookayama, Muguro-ku
Tokyo, 152-8552
Japan

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