Investment Decisions, Liquidity, and Institutional Activism: An International Study
The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism’s effect on the sensitivity of the inves...
| Autori: | ; ; |
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| Tipo di documento: | Elettronico Articolo |
| Lingua: | Inglese |
| Verificare la disponibilità: | HBZ Gateway |
| Interlibrary Loan: | Interlibrary Loan for the Fachinformationsdienste (Specialized Information Services in Germany) |
| Pubblicazione: |
2009
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| In: |
Journal of business ethics
Anno: 2009, Volume: 87, Fascicolo: 1, Pagine: 25-40 |
| Altre parole chiave: | B
investment-cash flow sensitivities
B institutional activism B Financial constraints B Firm Performance B corporate investment |
| Accesso online: |
Volltext (lizenzpflichtig) |
| Riepilogo: | The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism’s effect on the sensitivity of the investment policies of a company in the face of financial variables (such as cash flow and liquidity ratio) and market variables (ownership concentration and value creation index). To test our assertions, we analyze firm-level data for United Kingdom (U.K.), Germany, France, Denmark, and Spain during the period 1995–2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. |
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| ISSN: | 1573-0697 |
| Comprende: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/s10551-008-9798-9 |
