The Influence of Institutional Investor Ownership on Corporate Performance and the Critical Role of Equity Capital Markets

Over the past two decades, the landscape of institutional investor holdings has undergone significant transformation on a global scale. This PhD thesis meticulously dissects the evolving role of institutional investors in equity capital markets and their consequential impact on firm performance. Chapter 1 employs a bibliometric analysis to delineate the theoretical connections between institutional investors and equity capital markets and their consequential impact on firm performance. Performance is explored broadly, from operating performance to financial performance (such as stock risk and return) and non-financial performance. Building on the findings from Chapter 1 and situated within the broader framework of Agency Theory, Chapter 2 evaluates the viability of Special Purpose Acquisition Companies (SPACs) as investment opportunities compared to Initial Public Offerings (IPOs). This analysis will examine whether SPACs offer a superior alternative strategy for investors within equity capital markets. Finally, Chapter 3 scrutinizes the impact of institutional ownership on a firm's investment intensity. The research reveals several key findings. Firstly, the field of institutional investor research is burgeoning, with Corporate Social Responsibility (CSR) serving as a foundational theme for impactful research over the past two decades. However, within the constant theme, emerging niche topics within entrepreneurial finance and innovation suggest potential new research avenues. Secondly, SPACs underperform relative to a matched group of IPOs in operating and stock market performance, particularly under a buy-and-hold strategy. The duration required to execute a business combination negatively correlates with SPAC performance, and transactions close to the 80% deal threshold are negatively related to the share price performance and EBITDA margin. These findings underscore critical elements institutional investors should evaluate before investing in equity capital markets. Thirdly, institutional investors, particularly pressure-insensitive ones, significantly bolster organic investment levels, especially in industries necessitating substantial infrastructural investments, such as communications, energy, materials, and utilities. However, the influence of these pressure-insensitive investors on inorganic capital expenditures and research and development (R&D) investments is less pronounced, with variations observed based on investor type (such as private equity, hedge funds and investment advisors) and governance constraints. This PhD thesis provides a comprehensive overview of the latest trends in institutional investor research within the management field, discussing its evolution and the development of emerging topics.