Does informal governance matter to institutional investors? Evidence from social capital

• Published in: The Financial review (Buffalo, N.Y.) Vol. 59; no. 2; pp. 433 - 457
• Main Authors: Huang, Kershen, Shang, Chenguang
• Format: Journal Article
• Language: English
• Published: Knoxville Blackwell Publishing Ltd 01.05.2024
• Subjects: agency costs; institutional investors; monitoring; social capital

We find a positive association between institutional ownership and social capital. The social norms in a region, while not imposed by businesses or laws, play a monitoring role that disciplines managers from self‐serving behaviors. The resulting trustworthiness, through its mitigation of agency prob...