search query: @author Sanz, J.A.R. / total: 1
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Author: | Bobillo, A.M. Sanz, J.A.R. Gaite, F.T. |
Title: | Investment decisions, liquidity, and institutional activism: An international study |
Journal: | Journal of Business Ethics
2009 : VOL. 87:1 p. 25-40 |
Index terms: | United Kingdom Germany France Denmark Spain managers investments |
Language: | eng |
Abstract: | The activism of institutional investors tends increasingly toward the supervision and control of the behavior of the managers of big companies. This paper presents a model based on the creation of an activism index that help helps to assess such activism's impact on the sensitivity of the investment policies of a firm in the face of financial variables (e.g. cash flow, liquidity ratio) and market variables (ownership concentration, value creation index). Firm-level-data for UK, Germany, France, Denmark and Spain in 1995-2004 is analyzed. The results suggest a notable reduction in the sensitivity of company investment decisions in the face of these variables, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. |
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