The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia

Global financial crises and technological transition have forced the managers to adopt revolutionary methodologies by taking risky investments. However, excessive risk-taking may harm firms. Agency Theory suggested that misalignment incentives between the shareholders and the managers contributed to...

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Main Author:	Hanis Hazwani, Ahmad
Format:	Thesis
Language:	eng eng
Published:	2020
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/10339/1/depositpermission_s902488.pdf https://etd.uum.edu.my/10339/2/s902488_01.pdf
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id	my-uum-etd.10339
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spelling	my-uum-etd.103392023-03-01T04:07:33Z The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia 2020 Hanis Hazwani, Ahmad Azhari, Adilah School of Economics, Finance & Banking School of Economics, Finance & Banking HG Finance Global financial crises and technological transition have forced the managers to adopt revolutionary methodologies by taking risky investments. However, excessive risk-taking may harm firms. Agency Theory suggested that misalignment incentives between the shareholders and the managers contributed to the crisis. Institutional investors had been utilized in previous studies due to their diversification capacities. However, empirical studies on the heterogeneous of institutional investors is limited. This study aims to explore the effect of growth opportunities between various forms of institutional investors and corporate risk-taking. The panel data for 518 Malaysian non-financial firms, from 2000 to 2018 period, were analyzed using Ordinary Least Squared (OLS), Generalized Least Squared (GLS), and Generalized Moments of Method (GMM). Return on Asset (ROA), Stock Return, as well as Total Debt to Total Asset (TDTA) and Total Debt to Total Capital (TDTC), were used as risk-taking proxies to explain the corporate risk-taking behaviour while Market to Book Ratio (MTB) and Tobin’s Q was utilized as growth opportunities proxies. The proportion of the different types of institutional investors was employed in this study, which classified as the proportion of total institutional ownership in firms, institutional ownership by top five, institutional ownership by largest, active institutional investors, passive institutional investors, long-term ownership, and short-term ownership. Results revealed that heterogeneous of institutional investors have a significant impact on corporate risk-taking. However, not all types of institutional investors could mitigate unnecessary risk-taking such as passive institutional investors and short-term ownership. On the other hand, growth opportunities provided by the interaction between different types of institutional investors and corporate risk-taking have significant influences in high and low-growth firms. This study, therefore, recommended that the regulators and policymakers should carefully review the Malaysian Code for Institutional Investors (MCII) to update governance code by providing appropriate incentives for different types of institutional investors that strengthen the corporate governance system in Malaysia 2020 Thesis https://etd.uum.edu.my/10339/ https://etd.uum.edu.my/10339/1/depositpermission_s902488.pdf text eng staffonly https://etd.uum.edu.my/10339/2/s902488_01.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Azhari, Adilah
topic	HG Finance
spellingShingle	HG Finance Hanis Hazwani, Ahmad The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
description	Global financial crises and technological transition have forced the managers to adopt revolutionary methodologies by taking risky investments. However, excessive risk-taking may harm firms. Agency Theory suggested that misalignment incentives between the shareholders and the managers contributed to the crisis. Institutional investors had been utilized in previous studies due to their diversification capacities. However, empirical studies on the heterogeneous of institutional investors is limited. This study aims to explore the effect of growth opportunities between various forms of institutional investors and corporate risk-taking. The panel data for 518 Malaysian non-financial firms, from 2000 to 2018 period, were analyzed using Ordinary Least Squared (OLS), Generalized Least Squared (GLS), and Generalized Moments of Method (GMM). Return on Asset (ROA), Stock Return, as well as Total Debt to Total Asset (TDTA) and Total Debt to Total Capital (TDTC), were used as risk-taking proxies to explain the corporate risk-taking behaviour while Market to Book Ratio (MTB) and Tobin’s Q was utilized as growth opportunities proxies. The proportion of the different types of institutional investors was employed in this study, which classified as the proportion of total institutional ownership in firms, institutional ownership by top five, institutional ownership by largest, active institutional investors, passive institutional investors, long-term ownership, and short-term ownership. Results revealed that heterogeneous of institutional investors have a significant impact on corporate risk-taking. However, not all types of institutional investors could mitigate unnecessary risk-taking such as passive institutional investors and short-term ownership. On the other hand, growth opportunities provided by the interaction between different types of institutional investors and corporate risk-taking have significant influences in high and low-growth firms. This study, therefore, recommended that the regulators and policymakers should carefully review the Malaysian Code for Institutional Investors (MCII) to update governance code by providing appropriate incentives for different types of institutional investors that strengthen the corporate governance system in Malaysia
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Hanis Hazwani, Ahmad
author_facet	Hanis Hazwani, Ahmad
author_sort	Hanis Hazwani, Ahmad
title	The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
title_short	The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
title_full	The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
title_fullStr	The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
title_full_unstemmed	The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia
title_sort	effects of growth opportunities between different type of institutional investors and corporate risk-taking in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2020
url	https://etd.uum.edu.my/10339/1/depositpermission_s902488.pdf https://etd.uum.edu.my/10339/2/s902488_01.pdf
_version_	1776103794783813632

The effects of growth opportunities between different type of institutional investors and corporate risk-taking in Malaysia

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