Market discipline or rent extraction: impacts of share trading by foreign institutional investors in different corporate governance and investor protection environments

Zhang, Qiyu, Zhang, Xiaoxiang, Chen, Ding and Strange, Roger (2022) Market discipline or rent extraction: impacts of share trading by foreign institutional investors in different corporate governance and investor protection environments. International Review of Financial Analysis, 79. a101965 1-13. ISSN 1057-5219

[img] PDF - Accepted Version
Restricted to SRO admin only until 8 May 2023.
Available under License Creative Commons Attribution-NonCommercial No Derivatives.

Download (594kB)

Abstract

Minority investors' reliance on market discipline can vary with different country-level investor protection and firm-level corporate governance environments, which affect both discipline and rent extraction incentives of foreign institutional investors (FIIs). Using data from 47 economies between 2009 and 2017, we find that firm value increases with FIIs aggressive trading but decreases with FIIs discreet trading. The positive and negative impacts of FIIs trading are strengthened when investor protection is stronger, but weakened when corporate governance is stronger. Our analysis enhances understanding of trade-offs of FIIs trading between discipline and rent extraction in different corporate governance and investor protection environments.

Item Type: Article
Schools and Departments: University of Sussex Business School > Accounting and Finance
Research Centres and Groups: Business and Finance Research Group
Subjects: H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation > HG4538 Foreign investments
Depositing User: Qiyu Zhang
Date Deposited: 02 Dec 2021 08:27
Last Modified: 03 Mar 2022 11:46
URI: http://sro.sussex.ac.uk/id/eprint/102941

View download statistics for this item

📧 Request an update
Project NameSussex Project NumberFunderFunder Ref
Sustainable investing by mutual funds and their transparency level to end investors: the impacts on managerial myopic R&D investment behaviourG2968BRITISH ACADEMYSRG1920/101581