2010/11/05 by Kee H. Chung, Hao Zhang · 141 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Auditing, Earnings Management, Governance #Business #Corporate Finance and Governance #Corporate governance #Fiduciary #Finance #Financial Markets and Investment Strategies #Institutional investor #Law #Political science #Quality (philosophy)
paper · open access · doi:10.1017/s0022109010000682
published in Journal of Financial and Quantitative Analysis 46(1), 247-273 (Cambridge University Press)
openalex publication_date 2010/11/05 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15
Abstract In this study we examine the relation between corporate governance and institutional ownership. Our empirical results show that the fraction of a company’s shares that are held by institutional investors increases with the quality of its governance structure. In a similar vein, we show that the proportion of institutions that hold a firm’s shares increases with its governance quality. Our results are robust to different estimation methods and alternative model specifications. These results are consistent with the conjecture that institutional investors gravitate to stocks of companies with good governance structure to meet fiduciary responsibility as well as to minimize monitoring and exit costs.