Impact of Institutional Ownership on Firm Performance: Evidence from Automobile Industry of Pakistan

Abstract

This study investigated the effects of institutional ownership on firm performance by using the data of automobile sector of Pakistani listed firms. This study utilized the data from 2011 to 2020. For estimation, this research used OLS regression method, Hausman test is used to select between fixed and random. Results indicates that random effects model is best. Institutional ownership has negative effect on return on assets and return on equity. These finding support the pressure sensitive hypothesis that more the institutional ownership pressurizing the management of automobile firms, which impact negatively on firm performance of the automobile listed firms of Pakistan. This study theoretically contributed that institutional investors not always improve the firm performance or reduce the agency problem. This study provides insights to policy makers, managers and investors for automobile industry of Pakistan.       

Keywords:

Institutional Ownership, ROA, ROE, Automobile