Institutional Ownership and Firm Performance - Evidence from Romania

This paper examines the impact of institutional ownership on the firm’s financial performance for a sample of 1,432 Romanian companies, in a time frame that range from 2008 to 2015. The effects of institutional ownership on performance is estimated using fixed effects model (FE), random effects model (RE) and a corrective model (PCSE) as methodology. The main results indicate the fact that between institutional ownership and firm performance is an inverse relationship, but the coefficient is insignificant from the statistical point of view. A potential explanation for these results consists in the fact that this category of investors is underdeveloped in the Romanian market and their evolution was not a smooth one but, on the contrary, it was hampered by the effects of the global financial crisis as well as by the national political and economic turmoil