Where is foreign institutional investors’ efficacy? A transparency ＆ disclosure perspective

從透明揭露觀點找尋境外機構投資者的功效

This study examines the efficacy of foreign institutional investors (FINIs) in affecting information disclosure for a better corporate governance mechanism from multifaceted perspectives. Data for the current study were gathered from the Securities and Futures Institute of Taiwan and Taiwan Economic Journal databases. The study collected data on firms listed on the Taiwan Stock Exchange. The sample is a panel of 840 unique companies across a six-year span from 2005 to 2010. The first conclusion reached is that FINIs fail to play a powerful role in directly improving a firm’s information transparency and disclosure (T&D). Second, FINIs do not have significant efficacy in moderating the relationship between firm performance and information T&D. This study provides empirical evidence to dissolve the myth of FINIs’ efficacy from the viewpoints of the agency theory and international investment, thus suggesting new avenues of research for the literature on the causality of firm performance, FINIs and governance practices, and the perspective of agency problems. This study offers investees evidence in terms of strategies to attract investors for better governance.