Work

The relationship between heterogeneous institutional investors and operational performance: Evidence from mergers and acquisitions

Year: 2024

Type: article

Abstract: This study investigates the relationship between institutional investors and the inventory performance of companies engaged in mergers and acquisitions (M&As). Specifically, we examine the role of institutional ownership in the selection of target firms and their post-M&A performance. Additionally, we analyze how the effects of institutional investors vary based on their investment horizons and strategies. Our regression analysis reveals that acquiring firms with a large proportion of short-term institutional investors are more inclined to target firms with low inventory levels. This tendency stems from the preference of short-term institutional investors for better current operational performance, which drives decision-makers to merge with leaner firms. In contrast, acquiring firms with long-term institutional investors are more focused on performance improvement, even if the target firms have large inventories at the time of the M&A.

Source: Heliyon

DOI: 10.1016/j.heliyon.2024.e39365

Authors: Young Soo Park, Jaeseog Na

Institutions: Kookmin University, Duksung Women's University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $2,100

Funder: Duksung Women`s University