Effect of Corporate Governance on Institutional Investors’ Preferences: An Empirical Investigation in Taiwan

摘要

This study discusses the institutional investors’ shareholding base on corporate governancesystem in Taiwan. The sample was 4760 Taiwanese companies from 2005 to 2012. Then, this studyestablished six hypotheses to investigate the effects of corporate governance on institutional investors’shareholdings. The panel data regression model and piecewise regression model were adopted todetermine whether six hypotheses are supported. For sensitive analysis, additional considerationwas given on the basis of industrial category (electronics or nonelectronics), and the 2008–2010 globalfinancial crises. This study discovered that a nonlinear relationship exists between the domesticinstitutional investors’ shareholdings. The managerial ownership ratio and blockholder ownershipratio have positive effects both on domestic and foreign institutional investors. However, domesticand foreign institutional investors have distinct opinions regarding independent director ratios.Finally, the corporate governance did not improve institutional investors’ shareholdings duringfinancial crisis periods; instead, they paid more attention to firm profits or other characteristics.