Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets?

We investigate whether non–North American (non‐NA) institutional investment in firms listed on the Canadian stock markets increased between the pre‐ and post‐IFRS adoption periods relative to such investment in firms listed on the U.S. stock markets. Prior to IFRS adoption, Canada had high‐quality financial reporting standards that were similar to the U.S. standards. As consequences of IFRS adoption, Canadian financial statements became more comparable with European and other IFRS country financial statements and less comparable with neighboring U.S. financial statements. Thus, a question of interest is whether the enhanced comparability with non‐NA companies was beneficial in terms of attracting non‐NA investment to Canadian companies versus U.S. companies. We find that there was no significant change in non‐NA institutional investment in Canadian firms relative to U.S. firms for the very largest (fifth quintile) and for smaller (first, second, and third quintiles) Canadian companies. However, intermediate‐sized Canadian companies in the fourth size quintile lost non‐NA institutional investment relative to their U.S. peer companies, suggesting that non‐NA investors cared more about comparability with U.S. peer companies than non‐NA peer companies for companies in this size quintile.     

The Role of Pension Business Benefits in Institutional Block Ownership and Corporate Governance*

We investigate whether potential pension contracting benefits lead institutions that provide pension services to acquire ownership blocks in firms and the implications of such blockholdings on the firms' corporate governance. We use the 2006 Pension Protection Act, which expanded pension participation in certain states, as a quasi-exogenous shock and find an increase in block ownership by pension-providing institutions in firms with substantial operations in affected states. Further, we find that the acquisition of a large block increases the likelihood that the institution will provide future pension services to the firm. With regard to corporate governance, we find that the acquisition of large pension blockholdings is associated with higher CEO pay and lower CEO turnover following poor financial performance. However, contrary to the prediction of the private benefits hypothesis, we do not find consistent evidence that large pension blockholdings are associated with declining firm profitability, suggesting that pension institutions are incentivized to exert monitoring to preserve the investment value of their blockholdings. Overall, our evidence is consistent with pension service institutions acquiring ownership blocks to obtain pension contracts, but our evidence does not support the prediction that they use their influence to compromise shareholder value.     

Microfoundations of institutional change: Contrasting institutional sabotage to entrepreneurship

This paper addresses little understood microfoundations of institutionally driven organizational change and utilizes an institutional‐conflict‐based approach to examine innovation in organizational forms. Using a two‐case comparative analysis, we longitudinally examine the antecedents, mechanisms, and success/failure of attempts at change by institutional entrepreneurs. We analyze and develop theoretical insights on the interplay between internal political processes and external competitive actions in the creation of innovation in organizational forms and the subsequent legitimacy struggles through which an organizational field evolves in a sports (cricket) business context. We draw implications for institutional actors by observing patterns in organizational and institutional evolution in such contexts. We contribute to institutional entrepreneurship literature by developing a nuanced process model of success and failure in institutional entrepreneurship. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.