本份文档包含：关于该选题的外文文献、文献综述
一、外文文献
标题: The effects of institutional ownership on the value and risk of diversified
firms 作者: Mohammad Jafarinejada, Surendranath R. Joryb, Thanh N. Ngoc, 期刊: International Review of Financial Ana lys is (Volume 40 2015): 207-219
年份: 2015
The effects of institutional ownership on the value and risk of diversified firms
Abstract
We study the link between institutional ownership and firms' diversification strategy, value and risk. Our sample includes US-listed firms with segment data from 1998 to 2012. We find that not a ll kinds of diversification are value-destroying; unlike industria lly-diversified firms, global single-segment firms are trading at a premium relative to their imputed va lue. The presence of institutional investors and the stability of their shareholdings positively influence the likelihood that a firm is diversified. The proportion
(volatility) of institutional ownership is higher (lower) among diversified firms compared to domestic s ingle-segment firms. More importantly, the higher the proportions of institutional shareholdings, the higher the excess value of the diversified firm and the lower the firm idiosyncratic risk. Institutional ownership volatility, on the other hand, is inversely related to a firm excess value but positively related to its idiosyncratic risk. Thus, the presence of long-term stable institutional investors enhances the value of diversified firms. Our findings remain robust  to various model specifications and estimation techniques. Ke yw or ds: Institutional ownership; Corporate diversification; Diversification discount;
1.Introduction
The effect of diversification on firm value continues to attract considerable research interest. There are two main types of diversification: product- and geographic diversification (Vachani, 1991 and Martin, 2008). Product diversification refers to the degree  to  which firms  are  involved in  different industries  (we refer  to  them  as
business segments). Geographic diversification refers to the extent to which firms are involved in different countries (we refer to them as geographic segments). Bodnar, Tang, and Weintrop (1997) fi
nd that global  diversification is  associated  with higher firm value. In contrast, Denis, Denis, and Yost (2002) find that diversification decreases firm value. Other studies that suggest that diversification adversely affects firm value include Berger and Ofek  (1995), Fauver,  Houston,  and  Naranjo  (2004); a nd Kim and Mathur (2008).
Corporate diversification is appealing to investors. Under the premise that corporations are better at diversification than shareholders, corporate diversification should lower shareholders' investment risk at a fraction of the cost incurred by individual  investors  (see  Agmon  and  Lessard  (1977); Doukas  and  Travlos (1988); Harris and Ravenscraft (1991);Sanders and Carpenter (1998)). However, the diversity of operations at conglomerate firms makes it harder for ordinary investors to monitor them (Fatemi, 1984), opening the possibility for management to pursue self-interest objectives at the expense of the shareholders (Palich, Cardinal, &  Miller, 2000). Such agency problems will reduce shareholders' return on investment and/or increase their risk. As a consequence, if there is a group out there who is better at monitoring managers, it is better to follow their lead. Jensen and Meckling (1976),and Shleifer and Vishny (1986) suggest that large investors could well be that group. We propose to consider the contribution to firm value and risk brought about by such an important group of investors at diversified firms,  i.e.,  institutional  investors.
Institutional investors —inc luding mutual funds, hedge funds, pension funds, banks and insurance companies —are leading players in the financial markets as well as the primary owners of US corporate equity (Gillan & Starks, 2000). Estimates of their shareholdings at US firms range from 35% in the 1980s and 60% in the 2000s to 66% by the end of 2010. Given the size of their equity investments, they tend to exert considerable pressure on management to create wealth for investors (see also, Shleifer and Vishny (1986)). Jarrell and Poulsen (1987), Brickley, Lease,  and  Smith (1988); Agrawal and Mandelker (1990) suggest a direct link between institutional investors and shareholders' wealth. Consequently, managers pay  a  lot of  attention  to
meet the financial targets set by these  investors  (Easley  and  O'hara,  1987, Kyle, 1985 and Clay, 2002). Actions taken by the investors tend to generate a lot of  press and media attention, especially at large and diversified firms. Many institutional investors believe that diversified firms can generate more profit by restructuring their divis ions; examples include campaigns by investors demanding restructuring at big firms like PepsiCo, Sony, Timken,  and    McGraw-Hill.
Do institutional investors —as effective monitors of firm performance —support diversification and add value to  diversified firms  by  virtue  of  their  presence? We attempt to answer the question and analyze the importance of two measures of institutional ownership on diversified firms' value and risk,
i.e., the proportion of the shares held by the institutional  investors  (IOPr)  and  the  institutional  ownership volat ility (IOV). The first measure is extensively used in the literature, though mostly focused on domestic firms. An emerging literature on the effects of institutional ownership on firm value suggests that in addition to the proportion of shares held by investors, it is equally important to consider institutional ownership  stability.  They argue that not all institutional investors stay with a firm for the long-term. Some are short-term and would leave at the first s ign of trouble. E lyasiani and J ia (2010),and Ca lle n and Fa ng (2013)ar gue that ―stable‖institutiona l inves tor s are m ore incentivized to monitor target firms and improve shareholder welfare.
To the extent that diversification destroys value while institutional investors add value, we test whether their presence at diversified firms adds value. We hypothesize that diversified firms w ith higher proportions of shares held by institutional investors(IOPr) and lower variability in the proportions (IOV) are associated with higher excess values. Similar ly, we posit that firm risk is inversely related to IOPr and positively related to IOV. Managers would be under scrutiny not to cripple the firm with non-value added diversifications when more shares are held by institutional investors (IOPr). Conversely, if a firm pursues the wrong type of diversification, then there is little reason for the investors to hold onto their shares. Thus, we should observe a higher volatility in institutional shareholdings (IOV)  among  this subgroup of firms.
We examine the universe of firms listed in COMPUSTAT from 1998 to 2012. We break the universe of COMPUSTAT firms into four groups: (i) domestic single-segment firms (DS), (ii) domestic multi-segment firms (DM), (iii) global single-segment firms (GS) and (iv) global mult i-segment firms (GM). We find that unlike domestic firms, the trend is to go global, i.e., we observe a fall in the number of domestic firms and a rise in the number of global firms over time. We find that not all kinds of diversification are associated with negative excess values. As opposed to industrially-diversified firms, global single-segment firms trade at a premium relative to their matched domestic s ingle-segment firms. The idiosyncratic risk levels are l ower for diversif ied firms compared to domestic s ingle-segment firms.
The proportion of shares held by institutional investors (IOPr) is higher and the volatility in those proportions (IOV) is lower at diversif ied firms compared to domestic single-segment firms. Using probit regressions, we find that the likelihood to diversify is pos itively associated with the proportion of shares held by institutional investors  (IOPr)  and inversely  related to  its  volatility (IOV).
Univariate  analyses suggest  the  existence  of  a  positive    relationship between IOPr and firm's excess value and an inverse relationship between IOPr and firm's idiosyncratic risk. Conversely, IOV is inversely related to excess value and positively related to idiosyncratic risk. The evidence suggests
that there exists a significant relationship between the presence of long-term stable institutional investors and the  ability  of  diversified firms to create  wealth.
Consistent with the univariate findings, the coefficient of IOPr is positive  and that of IOV is negative in panel f ixed-effect regressions of firms' excess values. The coefficients of DMand GM, representing domestic multi-segment firms and globally diversified multi-segment firms, respectively, are both  negative and  highly  significant. On the other hand, globa l single segment (GS) firms are associated with higher excess values.
In regressions of firms' idiosyncratic risk, the coefficients of IOV and IOPr are positive and negative, respectively, suggesting that firms with lower proportions of equity  held  by  institutional  investors  and  higher  volatility in  that  proportion  are
perceived as riskier and carrying more idiosyncratic risk. Overall, the empirical evidence suggests that diversified firm value is linked to investors with considerable and stable shareholdings. Furthermore, the absence of stable, long-term institutional investors increases the idiosyncratic risk of diversified firms. Our empirical findings are robust to alternative control variables, various model specifications and estimation techniques.
Beyond complementing and extending the literature on the diversification discount, this study also contributes to the emerging literature on the role of institutional ownership stability on firm governance and performance. To the best
of our knowledge, our study is the first to assess the impact of institutional ownership stability among diversified firms. We consider the effect of institutional investors in lessening the diversification discount. We also examine the link between institutional investors and firm risk. The remainder of the paper is  organized  as follows. Section 2 reviews      the      literature    and      formulates      the hypotheses. Section 3presents the data. Section 4 presents the methods  used.  We present and discuss the findings in Section 5, and conclude the paper in the final section.
2.Literature review and hypotheses development
At the firm leve l, institutional investors tend to resist counterproductive strategies while supporting beneficial ones, especially shareholder driven ones (Bethel and Liebeskind, 1993, Hill and Snell, 1988, Holderness and    Sheehan, 1985 and Mikkelson and Ruback, 1991). They tend to lobby senior executives to implement restructuring strategies that are beneficial to all the  shareholders (see also Bethel and L iebeskind (1993)). Attig et al. (2012)argue that long-term institutional investors governance
have greater incentives and efficiencies —economies  of scale in the collection and processing of corporate information —to engage in effective monitoring, which in turn mitigate the asymmetric information  dilemma  and a ssociated  agency  problems.
Barclay, Holderness, and Pontiff (1993) find that investors va lue the skills and demands of  block  purchasers  and that firm  value increases follow ing  a  block trade.

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