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Publication Type : Journal Article
Publisher : Taylor & Francis Ltd.
Source : Applied Economics Letters, Taylor & Francis Ltd., 1-4. 10.1080/13504851.2022.2089341, 2022
Url : https://www.tandfonline.com/doi/abs/10.1080/13504851.2022.2089341
Keywords : Financial reporting quality, institutional investors, group affiliation, emerging markets
Campus : Kochi
School : Department of Management, School of Business
Department : Department of Management
Year : 2022
Abstract : We examined the sophisticated institutional investors’ preference for sustainable investing. Precisely, we examine the link between financial reporting quality and investment behaviour of institutional investors in the context of relatively high level of information asymmetry. The results suggest that sophisticated (i.e. institutional) investors tend to shy away from firms with poor quality of information in financial statements. Our analysis also suggest that an aggregate institutional ownership reduces by 1.2% for every unit decrease in financial reporting quality, and foreign institutional ownership decreases by 1%. Foreign ownership in firms with influential block holders decreases by 3% for every unit decrease in financial reporting quality. Overall, we find that institutional investors avoid relying on trading strategies that enhance returns based on information discovery in markets with high information acquisition costs and liquidity constraints, such as emerging markets.
Cite this Research Publication : V. Gopikumar & Smitha Nair & Gyanendra Singh Sisodia, (2022). The effect of financial reporting quality on institutional ownership. Applied Economics Letters, Taylor & Francis Ltd., 1-4. 10.1080/13504851.2022.2089341.