Investigating the influence of institutional ownership stability on performance and capital structure of listed firms in Taiwan

[[abstract]]The purpose of this paper is to investigate the influence of the holding and stability of institutional ownership on the performance and capital structure of the firm. We analyze 632 sample companies listed in Taiwan Stock Exchange from 2005 to 2010, using three proxies, standard deviation of institutional holding proportion, non-zero-points duration, and maintain-stake-points duration as the variable for ownership stability. The empirical results show that increasing stability of institutional holdings is related to better firm performance, especially the stability of foreign institutional investors. The large-size firms with higher CEO incentive compensation, higher insider holding, and higher growth get better performance. However, if performance is poor, institutional holding will decline for firms with high CEO incentive compensation, high share turnover and high growth. Further analysis show that institutional investors tend to increase holdings of low leveraged firm