学士学位论文—-公司多元化经营外文文献及文献综述.doc
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1、本份文档包含:关于该选题的外文文献 、文献综述一、外文文献标题: The effects of institutional ownership on the value and risk of diversified firms 作者: Mohammad Jafarinejada,Surendranath R. Joryb, Thanh N. Ngoc,期刊: International Review of Financial Analysis (Volume 40 2015): 207-219 年份: 2015The effects of institutional ownership on
2、 the value and risk of diversified firmsAbstractWe study the link between institutional ownership and firms diversification strategy, value and risk. Our sample includes US-listed firms with segment data from 1998 to 2012. We find that not all kinds of diversification are value-destroying; unlike in
3、dustrially-diversified firms, global single-segment firms are trading at a premium relative to their imputed value. The presence of institutional investors and the stability of their shareholdings positively influence the likelihood that a firm is diversified. The proportion (volatility) of institut
4、ional ownership is higher (lower) among diversified firms compared to domestic single-segment firms. More importantly, the higher the proportions of institutional shareholdings, the higher the excess value of the diversified firm and the lower the firm idiosyncratic risk. Institutional ownership vol
5、atility, on the other hand, is inversely related to a firm excess value but positively related to its idiosyncratic risk. Thus, the presence of long-term stable institutional investors enhances the value of diversified firms. Our findings remain robust to various model specifications and estimation
6、techniques.Keywords:Institutionalownership;Corporatediversification; Diversification discount;1. IntroductionThe effect of diversification on firm value continues to attract considerable research interest. There are two main types of diversification: product- and geographic diversification (Vachani,
7、 1991 and Martin, 2008). Product diversification refers to the degree to which firms are involved in different industries (we refer to them asbusiness segments). Geographic diversification refers to the extent to which firms are involved in different countries (we refer to them as geographic segment
8、s). Bodnar, Tang, and Weintrop (1997) find that global diversification is associated with higher firm value. In contrast, Denis, Denis, and Yost (2002) find that diversification decreases firm value. Other studies that suggest that diversification adversely affects firm value include Berger and Ofek
9、 (1995), Fauver, Houston, and Naranjo (2004); and Kim and Mathur (2008).Corporate diversification is appealing to investors. Under the premise that corporations are better at diversification than shareholders, corporate diversification should lower shareholders investment risk at a fraction of the c
10、ost incurred by individual investors (see Agmon and Lessard (1977); Doukas and Travlos (1988); Harris and Ravenscraft (1991);Sanders and Carpenter (1998). However, the diversity of operations at conglomerate firms makes it harder for ordinary investors to monitor them (Fatemi, 1984), opening the pos
11、sibility for management to pursue self-interest objectives at the expense of the shareholders (Palich, Cardinal, & Miller, 2000). Such agency problems will reduce shareholders return on investment and/or increase their risk. As a consequence, if there is a group out there who is better at monitoring
12、 managers, it is better to follow their lead. Jensen and Meckling (1976), and Shleifer and Vishny (1986) suggest that large investors could well be that group. We propose to consider the contribution to firm value and risk brought about by such an important group of investors at diversified firms, i
13、.e., institutional investors.Institutional investors including mutual funds, hedge funds, pension funds, banks and insurance companies are leading players in the financial markets as well as the primary owners of US corporate equity (Gillan & Starks, 2000). Estimates of their shareholdings at US fir
14、ms range from 35% in the 1980s and 60% in the 2000s to 66% by the end of 2010. Given the size of their equity investments, they tend to exert considerable pressure on management to create wealth for investors (see also, Shleifer and Vishny (1986). Jarrell and Poulsen (1987), Brickley, Lease, and Smi
15、th (1988); Agrawal and Mandelker (1990) suggest a direct link between institutional investors and shareholders wealth. Consequently, managers pay a lot of attention tomeet the financial targets set by these investors (Easley and Ohara, 1987, Kyle, 1985 and Clay, 2002). Actions taken by the investors
16、 tend to generate a lot of press and media attention, especially at large and diversified firms. Many institutional investors believe that diversified firms can generate more profit by restructuring their divisions; examples include campaigns by investors demanding restructuring at big firms like Pe
17、psiCo, Sony, Timken, and McGraw-Hill.Do institutional investors as effective monitors of firm performance support diversification and add value to diversified firms by virtue of their presence? We attempt to answer the question and analyze the importance of two measures of institutional ownership on
18、 diversified firms value and risk, i.e., the proportion of the shares held by the institutional investors (IOPr) and the institutional ownership volatility (IOV). The first measure is extensively used in the literature, though mostly focused on domestic firms. An emerging literature on the effects o
19、f institutional ownership on firm value suggests that in addition to the proportion of shares held by investors, it is equally important to consider institutional ownership stability. They argue that not all institutional investors stay with a firm for the long-term. Some are short-term and would le
20、ave at the first sign of trouble. Elyasiani and Jia (2010), and Callen and Fang (2013) argue that “stable” institutional investors are more incentivized to monitor target firms and improve shareholder welfare.To the extent that diversification destroys value while institutional investors add value,
21、we test whether their presence at diversified firms adds value. We hypothesize that diversified firms with higher proportions of shares held by institutional investors (IOPr) and lower variability in the proportions (IOV) are associated with higher excess values. Similarly, we posit that firm risk i
22、s inversely related to IOPr and positively related to IOV. Managers would be under scrutiny not to cripple the firm with non-value added diversifications when more shares are held by institutional investors (IOPr). Conversely, if a firm pursues the wrong type of diversification, then there is little
23、 reason for the investors to hold onto their shares. Thus, we should observe a higher volatility in institutional shareholdings (IOV) among this subgroup of firms.We examine the universe of firms listed in COMPUSTAT from 1998 to 2012. We break the universe of COMPUSTAT firms into four groups: (i) do
24、mestic single-segment firms (DS), (ii) domestic multi-segment firms (DM), (iii) global single-segment firms (GS) and (iv) global multi-segment firms (GM). We find that unlike domestic firms, the trend is to go global, i.e., we observe a fall in the number of domestic firms and a rise in the number o
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