Institutional Investors Ownership and Financial Performance: An Empirical Study of CAC40 Companies

Abstract

The purpose of this study is to investigate the effects of ownership by institutional investors on the financial performance of a sample of 15 French firms that were listed between 2015 and 2022 on the CAC40 index. To achieve the study’s objective, the percentage of shares owned by foreign and domestic institutional investors was used as a measure of institutional investors’ ownership, while the return on assets was used as a measure of financial performance. The study employed a statistical approach using Dynamic Panel Data Models with the Generalised Method of Moments (GMM). The study found a statistically significant negative impact between the ownership percentages of foreign and domestic institutional investors and financial performance. Regarding control variables, agency costs had a positive and statistically significant impact on financial performance, while liquidity had no significant effect.

Keywords

• institutional investors
• financial performance
• dynamic panel data models
• gmm