Browsing by Author "ABDULAZIZ AHMED ABDULAZIZ ALOMRAN"
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- ItemRestrictedThree Essays in Corporate Finance. New evidence from the UK on the impact of Institutional Investors’ Investment HorizonABDULAZIZ AHMED ABDULAZIZ ALOMRAN; Francesca Cuomo, Anastasiya Shamshur and Andrea PatacconiThis thesis investigates the role of institutional investors’ investment horizon using the UK traded firms on the London Stock Exchange for the period 2000–2016. The thesis consists of three essays. The first and second essays focus on the impact of the presence of institutional investors with a long-term horizon on firms’ cash holdings as an essential element in corporate finance. In particular, the first essay builds on economic perspectives, the behavioural theory and the value-creation versus value-appropriation literatures and examines the moderating role of contexts on the relationship between long-term institutional ownership and cash holdings. I find that the impact of long-term institutional ownership and cash holdings depends on the magnitude of agency costs and is context specific to the implications of cash for firm performance. The second essay builds on the findings of the first essay and focuses on the effect of long-term institutional ownership on the level and value of cash holdings given the firm’s optimal level of cash. Incorporating agency concerns and the precautionary needs for cash holdings, I find that the impact of long-term institutional investors on cash holdings depends on the cash deviation from the optimal level of cash. On the one hand, long-term institutional ownership is negatively associated with cash holdings only for firms with excess cash; on the other hand, firms with a high presence of long-term institutional investors increase cash when they hold cash below the optimal level. I further show that long-term institutional ownership is associated with a higher value of cash holdings and better use of excess cash. Finally, the third essay extends the prior discussion by exploring the impact of investor horizon on shareholder proposals as an effective governance channel of corporate changes. Building on the agency view and the monitoring function of institutional investors, I particularly investigate the influence of institutional investors with a long-term investment horizon on the probability of shareholder proposals targeting, market reaction to shareholder proposals, and voting outcome of these proposals. I find that firms with a high presence of long-term institutional investors are less likely to be targeted by shareholder proposals; however, when these firms are targeted by shareholder proposals, they would experience more positive market reaction and higher voting in favour of these proposals. Overall, these findings support my predictions and are consistent with the effective role of the presence of long-term institutional investors.