Accessibility navigation

Institutional investor monitoring motivation and the marginal value of cash

Zeng, Y., Yin, C. and Ward, C. (2018) Institutional investor monitoring motivation and the marginal value of cash. Journal of Corporate Finance, 48. pp. 49-75. ISSN 0929-1199

Text - Accepted Version
· Available under License Creative Commons Attribution Non-commercial No Derivatives.
· Please see our End User Agreement before downloading.


It is advisable to refer to the publisher's version if you intend to cite from this work. See Guidance on citing.

To link to this item DOI: 10.1016/j.jcorpfin.2017.10.017


This paper examines whether the motivation of institutional investors in monitoring a firm is positively related to the relative importance of the firm's stock in their portfolios. We find that greater motivated monitoring institutional ownership is associated with a higher marginal value of corporate cash holdings, which cannot be explained by other corporate governance measures and institution types. Further, we find that the economic effect of institutional monitoring on the marginal value of cash falls with decreasing institutions' monitoring motivation. Based on these findings, we construct a monitoring motivation-weighted institutional ownership measure and document a positive relation between it and the marginal value of cash. Our results are robust after controlling for the endogeneity of institutional ownership, three cash regimes, firm size, and changes in US public firms over time.

Item Type:Article
Divisions:Henley Business School > ICMA Centre
ID Code:73415


Downloads per month over past year

University Staff: Request a correction | Centaur Editors: Update this record

Page navigation