The influence of heterogeneous institutional investors on company strategies in emerging countries: Evidence from Brazil

Abstract

The objective of this study is to evaluate the impact of institutional investor shareholding on strategic corporate management. Focusing on Brazilian non-financial corporations, we consider the heterogeneity of institutional investors – based on their main characteristics and investment profile –, in the context of Brazilian institutional framework, to explore the dynamics between institutional ownership and corporate strategies. Applying principal component and cluster analysis, we identified four distinct groups of institutional investors. The results from our dynamic panel data model indicate that institutional investors do not impact dividend policy but do have a positive influence over financial investments. While neither short-term investors nor those with a longer term view were found to have any influence on the financialization of corporate strategies, we found that presence of specialized investors characterized by intermediate shareholder positions – primarily independent and national private asset managers – are associated with greater financial investments, but lower dividend payments.

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