SAF Research Seminar Series Finance Presentation by Wei Yu Jiang
- Date
- January 24, 2024
- Time
- 12:30 PM EST - 1:30 PM EST
- Location
- Virtual (Zoom)
- Contact
- Gloria Chang <g2chang@torontomu.ca>
SAF Research Seminar Series Finance Presentation
Finance Presentation by Wei Yu Jiang
Foreign Investors’ Industry Expertise and Firm Value
Abstract
This paper identifies the industry expertise of foreign institutional investors using the industry structure of their domestic stock market as an indicator. Foreign investors are labeled as advantaged if the firm’s industry is one of their home country’s Top 3 industries in terms of market capitalization. Using firm-level data across 70 non-U.S. countries between 2000 and 2017, I show that foreign advantaged ownership has a positive and long-term effect on firm value, while remaining foreign ownership has an insignificant or negative effect. I further identify two economic mechanisms through which the industry expertise of advantaged foreign investors may increase firm value: advantaged foreign investors are better monitors and bring greater knowledge spillovers. Finally, the positive effects of advantaged foreign investors on firm value are primarily due to operating improvements rather than changes in payout policy.
