Publication details for Professor Dennis Philip

Andreou, P, Fiordelisi, F Harris, T & Philip, D (Accepted). Institutional Ownership and Firms’ Thrust to Compete. British Journal of Management

• Publication type: Journal Article
• ISSN/ISBN: 1467-8551
• Further publication details on publisher web site
• Durham Research Online (DRO) - may include full text

Author(s) from Durham

• Professor Panayiotis Andreou
• Professor Dennis Philip
• Dr Terry Harris

Abstract

This article provides evidence on the impact of transient (short-term) institutional investors on a
firm’s thrust to compete. A firm’s thrust to compete, as an attribute of corporate culture, captures
the relative importance of corporate values that push a firm to achieve shareholder value in the
short-term by emphasizing goal achievement, fast response to external information, and enhanced
competitiveness. We find that greater ownership by transient investors results in firms
intensifying their future thrust to compete, suggesting that firms respond to these investors’
preferences and competitive pressures for achieving short-term value creation. In line with our
expectations, this effect is not observed for firms with greater ownership by long-horizon
institutional investors, who are incentivized to place their emphasis on long-term firm value, over
short-term gains. Our findings reveal that the composition of institutional ownership influences
the organizational culture of firms in a non-homogeneous way. As such, we provide significant
empirical insights for the ongoing debate on the implications arising from the behind‐the‐scenes
engagement of institutional investors with management.