The impact of institutional shareholding on firm income instability risk: Evidence from Finland

Abstract

We empirically examine the effect of institutional shareholding on firm risk-taking, narrowly defined. We categorize institutional shareholding into those with both investment and business relationships with the firms in which they own equity stakes (termed pressure-sensitive institutions), and institutions with only an investment relationship with the firm (termed pressure-resistant). The results suggest a differential impact of different institutional investors on firm risk-taking.