Financial Education

Institutional investors are increasingly using their voting rights to influence the management teams at companies in which they invest. In the June 2007 Journal of Banking and Finance, Cornett, Marcus, Saunders and Tehranian examine whether such actions actually improve the operating performance of the investee companies.

Using institutional ownership data from 13-F statements and cash flow ROA as a measure of operating performance, the authors find that operating performance is related to the degree of institutional ownership.  (Higher institutional ownership indicates better operating performance.)

For more information, see all articles on: Active Management, Corporate Governance, Governance, Institutional Investing, Investing in Stocks, Investment Returns

See also:

Does Employee Ownership Hurt Stock Returns?

Where is the Value Premium?

Using Protective Puts to Improve Bond Portfolio Performance

Price/Book, Operating Leverage and Market Returns

Listing Stocks on Multiple Worldwide Exchanges