Publication Type
Working Paper
Version
submittedVersion
Publication Date
12-2013
Abstract
We propose an Institutional Presence (IP) measure to capture the latent role of non-owner institutional investors who nevertheless may be observing a firm. We employ this measure to examine whether the ‘presence’ of institutional investors reduces information asymmetry in the market. Firms in areas with high institutional presence experience higher liquidity, faster information incorporation, lower costs of equity capital, and less financing frictions relative to firms in low IP areas. The results hold after controlling for firm and geographical characteristics including institutional ownership and urban locality. Our findings indicate that being in the presence of institutional investors brings tangible benefits.
Keywords
institutional investors, non-shareholders, liquidity, cost of capital
Discipline
Finance and Financial Management | Portfolio and Security Analysis
Research Areas
Finance
First Page
1
Last Page
65
Identifier
10.2139/ssrn.2373506
Embargo Period
9-13-2021
Citation
SULAEMAN, Johan and WEI, Chi Shen.
Institutional presence. (2013). 1-65.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6778
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.2373506