The interplay between institutional investors, debt and firm value
Evidence from France, Germany and the UK
Publication date
2023-03-01
Document type
Forschungsartikel
Author
Organisational unit
Scopus ID
Publisher
Global Business Publications
Series or journal
Multinational Finance Journal
ISSN
Periodical volume
27
Periodical issue
1-2
First page
3
Last page
49
Peer-reviewed
✅
Part of the university bibliography
✅
Language
English
Keyword
Crisis
Debt
Firm value
Institutional ownership
Abstract
This study investigates the interaction effect between institutional ownership and debt ratio on firm value. Analyzing a large sample consisting of 9,998 observations from 1,351 distinct non-financial firms listed in France, Germany, and the United Kingdom (UK) over the 2002-2018 period, it is documented that the interaction variable exerts a positive effect on firm value. This finding is robust to various firm characteristics, industry and year fixed effects, and it also extends to alternative measures of ownership and firm value. Identification analyses suggest that the effect is causal. This study further finds a stronger impact during times of financial turmoil and that there exists a heterogeneity across different types of institutional ownership. Distinguishing between bank-based and market-based financial systems does not affect the inferences.
Version
Published version
Access right on openHSU
Metadata only access