Monitoring intensity, investment inefficiency and institutional shareholders: Evidence from JSE listed companies in South Africa-Reference-Cited by-同舟云学术

Monitoring intensity, investment inefficiency and institutional shareholders: Evidence from JSE listed companies in South Africa

Published:2021-07-09 Issue:3 Volume:18 Page:1-15
ISSN:1810-4967
Container-title:Investment Management and Financial Innovations
language:
Short-container-title:Investment Management and Financial Innovations

Author:

Obagbuwa Oloyede¹^ORCID,Kwenda Farai²^ORCID,Wilfred Akinola Gbenga³^ORCID

Affiliation:

1. Ph.D. Student, School of Accounting, Law and Management Faculty, Economics and Finance Department, University of KwaZulu-Natal

2. Ph.D., Associate Professor, School of Accounting, Law and Management Faculty, Economics and Finance Department, University of KwaZulu-Natal

3. Ph.D., Dr., School of Accounting, Law and Management Faculty, Economics and Finance Department, University of KwaZulu-Natal

Abstract

This study investigates how variation in monitoring intensity affects the efficiency of firms’ investment decisions in an emerging market in South Africa. The study hypothesis argues that the distraction of institutional shareholders has a statistically significant positive effect on corporate investment inefficiency. Using a more robust Generalized Method of Moments (Sys GMM) estimation approach to analyze data collected for firms listed at the Johannesburg Stock Exchange (JSE) for the period 2004–2019, the results showed that the distraction of institutional shareholders has a positive and statistically significant impact on investment inefficiency. That is, when the attention of institutional shareholders is shifted, the intensity of their monitoring drops, and the executive is involved in investment decisions that are not profitable. This insight has an implication for stakeholders and the value-creating corporate governance mechanism. The study concludes that institutional shareholders must always sustain their monitoring intensity to ensure that corporate decisions are consistent with the firm’s value.

Publisher

LLC CPC Business Perspectives

Subject

Strategy and Management,Economics and Econometrics,Finance,Business and International Management

Link

https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15297/IMFI_2021_03_Obagbuwa.pdf

Reference68 articles.

1. Abarbanell, J. S., & Bushee, B. J. (1998). Abnormal returns to a fundamental analysis strategy. The Accounting Review, 73(1), 19-45. - https://www.semanticscholar.org/paper/Abnormal-Returns-to-a-Fundamental-Analysis-Strategy-Abarbanell-Bushee/3b59ce12e84acfc3a410df16baa9a2f621eb372b

2. Aghion, P., Van Reenen, J., & Zingales, L. (2013). Innovation and institutional ownership. - https://www.aeaweb.org/articles?id=10.1257/aer.103.1.277

3. Antoniou, A., Guney, Y., & Paudyal, K. (2008). The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions. The Journal of Financial and Quantitative Analysis, 43(1), 59-92. - http://www.jstor.org/stable/27647340

4. Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations

5. Another look at the instrumental variable estimation of error-components models

Cited by 3 articles. 订阅此论文施引文献订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献

1. Internal determinants of financial performance among listed food supermarkets in the South African economy;Investment Management and Financial Innovations;2024-07-26

2. IT Service Management Best Practices in Insurance Industries;Springer Proceedings in Business and Economics;2024

3. Preparing first-year students in higher education for ethical decision making: Identifying and understanding personal values in a South African Ubuntu context;Southern African Journal of Accountability and Auditing Research;2022-11