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Institutional Investors and Shareholder Litigation
Author(s) -
Barabanov Sergey S.,
Ozocak Onem,
Turtle H.J.,
Walker Thomas J.
Publication year - 2008
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/j.1755-053x.2008.00011.x
Subject(s) - fiduciary , institutional investor , shareholder , business , pension , investment (military) , finance , accounting , financial system , corporate governance , law , duty , politics , political science
We examine whether institutional investors are able to avoid future litigation. Our results show that institutions provide a fiduciary role by decreasing or eliminating their positions in sued firms well before litigation begins. We also find that institutional groups with high monitoring ability (independent investment advisors and mutual funds) are more proactive in their trading behavior than are institutions with low monitoring ability (banks, insurance companies, and unclassified institutions such as endowments, foundations, and self‐managed pension funds). We find that percentage changes in institutional ownership are correlated with public information available more than two quarters before litigation.