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Dissertation Billik (2).pdf (2.21 MB)

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THE INTERACTION BETWEEN INSTITUTIONAL AND ACTIVIST INVESTORS AND ITS IMPACT ON CORPORATE GOVERNANCE

Billik, William Michael
http://orcid.org/0000-0002-6592-9203
http://rave.ohiolink.edu/etdc/view?acc_num=kent1521471517116891

Abstract Details

2018, PHD, Kent State University, College of Business and Entrepreneurship, Ambassador Crawford / Department of Finance.
Institutional investors own a significant percentage of publicly traded firms, but appear to exert little control over management. Activist investors own relatively small percentages of firms, but appear to exert an over-weighted level of control. This study examines the relationship between institutional ownership and activist ownership and the impact the relationship has on corporate governance. Building from the models of governance by exit (Admati and Pfleiderer (2009), Edmans (2009)) and on the threat of exit (Edmans and Manso (2010)) this study incorporates a model of activists leveraging the under-valuing of shareholder voting by institutions in exchange for a monitoring role (Gilson and Gordon (2013)) to develop a framework to test whether activist "voice" in firm governance is backed by institutional "exit" powers. A four-step structure is proposed: 1) examine the impact of activist investment on institutional investment, 2) examine the impact of activist investment on firm governance, 3) examine the impact of institutional investment on firm governance, and 4) examine the impact of firm governance in conjunction with activist investment on institutional investment. If all four steps find a significant relationship, then empirical evidence of institutional investor support for the efforts of activists in changing firm governance can be demonstrated. Identifying activist investors through SEC 13d filings and institutional investors through SEC 13f filings, and using E-Index, total board share ownership, median board share ownership, and return on assets as measures of corporate governance, hypothesis testing is performed with an emphasis on firm fixed effects, with year effects methodology, and Blundell-Bond dynamic panel model methodology with year effects. The results fail to support the framework of institutional "exit" backing activist "voice" to affect a change in corporate governance. The results of the study do lead to the conclusions that 1) institutional investors increase shareholdings as activist investors increase shareholdings, 2) institutional investors "exiting" impacts managerial entrenchment in firms, and 3) increased activist ownership contemporaneously corresponds to increased managerial entrenchment.
John Thornton, Ph.D. (Committee Co-Chair)
Jayaram Muthuswamy, Ph.D (Committee Co-Chair)
Eric Johnson, Ph.D (Committee Member)
173 p.
Finance

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Citations

  • Billik, W. M. (2018). THE INTERACTION BETWEEN INSTITUTIONAL AND ACTIVIST INVESTORS AND ITS IMPACT ON CORPORATE GOVERNANCE [Doctoral dissertation, Kent State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=kent1521471517116891

    APA Style (7th edition)

  • Billik, William. THE INTERACTION BETWEEN INSTITUTIONAL AND ACTIVIST INVESTORS AND ITS IMPACT ON CORPORATE GOVERNANCE. 2018. Kent State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=kent1521471517116891.

    MLA Style (8th edition)

  • Billik, William. "THE INTERACTION BETWEEN INSTITUTIONAL AND ACTIVIST INVESTORS AND ITS IMPACT ON CORPORATE GOVERNANCE." Doctoral dissertation, Kent State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=kent1521471517116891

    Chicago Manual of Style (17th edition)

kent1521471517116891
385
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This open access ETD is published by Kent State University and OhioLINK.