This study revisits the question of whether long-term institutional investors contribute to the enhancement of firm value. This study specifically examines how institutional monitoring, differentiated by investment duration, affects long-term investor value appropriation (LIVA). The results show a strong positive relationship between long-term institutional ownership and LIVA, especially when dedicated institutional investors have stakes in companies. Additionally, the research suggests that long-term institutional monitoring has a more significant impact on firms with high levels of information asymmetry, highlighting the balance between the advantages and disadvantages of monitoring. This research contributes to the existing body of knowledge by demonstrating the monitoring role of long-term institutional investors in corporate decision-making. It clarifies the different monitoring roles of long-term versus short-term institutional investors, which influence variations in long-term firm value. The findings emphasize the importance of attracting long-term, dedicated institutional investors to enhance firm value, particularly in companies with higher information asymmetry. Policymakers and corporate leaders can use these insights to create regulations that encourage stable institutional ownership and align corporate governance practices to attract long-term investors, ultimately improving firm performance.
Chune Young Chung (Mon,) studied this question.