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Marching to the Beat of Different Drummers: The Influence of Institutional Owners on Competitive Actions

Year: 2010

Type: article

Abstract: This research extends agency theory by exploring the influence of varied, competing, principal interests on executive actions. Findings reveal that ownership of a firm by dedicated institutional investors, who hold concentrated portfolios over time, is positively associated with firm use of strategic competitive actions. Ownership by transient institutional investors, who hold broad portfolios and make frequent trades based on current earnings, is negatively associated with strategic competitive actions and positively associated with tactical ones. Appreciable ownership of the same firm by these two classes of investors influences both strategic and tactical competitive actions. These results have broad implications for executives, investors, and policy makers.

Source: Academy of Management Journal

DOI: 10.5465/amj.2010.52814589

Authors: Brian L. Connelly, Laszlo Tihanyi, S. Trevis Certo, Michael A. Hitt

Institutions: Auburn University, Texas A&M University, Arizona State University, Texas Christian University

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2169020026

FWCI: 16.12

Cites: 100

Cited by: 317

Related to: 10