Institutional investor heterogeneity and firm valuation: Evidence from Latin America |
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| Institution: | 1. Center for Latin American Monetary Studies — CEMLA, Mexico;2. Economic Research Office of the Central Bank of Venezuela, Av. Urdaneta Esq. Las Carmelitas, 1010 Caracas, Venezuela;1. Department of Accounting, School of Business, Faculty of Business and Law, Deakin University, Melbourne, Australia;2. Department of Accounting, School of Business, Deakin University, Melbourne, Australia |
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| Abstract: | This article analyses how the corporate valuation of Latin American firms is affected by the presence of a blockholder institutional investor. The study uses a data set of 562 firms from six Latin American countries for the 1997–2011 period. We found that the presence of an institutional investor has a positive effect of 8% on firm value, which increases to 21% for the cases where there is blockholder coalition with an institutional investor. After dividing the sample by investor type, we found that independent institutional ownership implies a positive premium on firms' Tobin's Q, while the presence of a grey investor has a negative effect on firm valuation. |
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