Insider ownership and default risk: the role of institutional ownership
| (1) | (2) | (3) | (4) | (5) | (6) | |
|---|---|---|---|---|---|---|
| High institutional ownership | Low institutional ownership | |||||
| DD | DD | DD | DD | DD | DD | |
| DIR | −0.007*** | −0.008*** | ||||
| (−4.708) | (−6.838) | |||||
| CEOIR | −0.012*** | −0.010*** | ||||
| (−6.200) | (−7.628) | |||||
| EMPIR | 0.004 | −0.001 | ||||
| (0.838) | (−0.239) | |||||
| LNS | 0.082*** | 0.053*** | 0.093*** | 0.130*** | 0.117*** | 0.146*** |
| (7.013) | (4.200) | (8.084) | (10.537) | (8.986) | (12.035) | |
| K/S | 0.728*** | 0.723*** | 0.742*** | 0.730*** | 0.720*** | 0.744*** |
| (11.682) | (10.820) | (11.912) | (14.382) | (13.356) | (14.669) | |
| Y/S | 6.492*** | 6.245*** | 6.486*** | 3.327*** | 3.442*** | 3.275*** |
| (25.804) | (23.219) | (25.728) | (14.709) | (14.348) | (14.462) | |
| R&D/K | 0.024*** | 0.021*** | 0.024*** | 0.004 | 0.003 | 0.005 |
| (3.204) | (2.712) | (3.156) | (0.971) | (0.630) | (1.069) | |
| RDUM | 0.344 | −0.318 | 0.387 | 1.489 | 1.473 | 1.591 |
| (0.471) | (−0.369) | (0.530) | (0.876) | (0.863) | (0.935) | |
| I/K | −0.357*** | −0.321*** | −0.375*** | −0.080*** | −0.078*** | −0.080*** |
| (−4.978) | (−4.339) | (−5.215) | (−2.963) | (−2.828) | (−2.951) | |
| ROA | 0.026*** | 0.027*** | 0.024*** | 0.033*** | 0.032*** | 0.031*** |
| (9.280) | (9.269) | (8.698) | (13.013) | (12.058) | (12.483) | |
| LEVERAGE | −6.680*** | −6.664*** | −6.718*** | −5.199*** | −5.228*** | −5.248*** |
| (−66.608) | (−61.067) | (−67.344) | (−66.300) | (−62.644) | (−67.101) | |
| Age | 0.129*** | 0.108*** | 0.164*** | −0.047** | −0.040* | −0.004 |
| (6.088) | (4.585) | (8.203) | (−2.457) | (−1.931) | (−0.226) | |
| Constant | 3.430*** | 4.444*** | 3.119*** | 1.940 | 2.062 | 1.498 |
| (4.590) | (5.058) | (4.178) | (1.136) | (1.203) | (0.876) | |
| Observations | 15,990 | 13,789 | 16,024 | 20,119 | 17,822 | 20,121 |
| R-squared | 0.605 | 0.610 | 0.604 | 0.508 | 0.517 | 0.507 |
| Firm fixed effect | Yes | Yes | Yes | Yes | Yes | Yes |
| Year effects | Yes | Yes | Yes | Yes | Yes | Yes |
| χ2 | 27.04 | 22.18 | 28.26 | |||
| Prob > χ2 | 0.000 | 0.000 | 0.000 | |||
| (1) | (2) | (3) | (4) | (5) | (6) | |
|---|---|---|---|---|---|---|
| High institutional ownership | Low institutional ownership | |||||
| DD | DD | DD | DD | DD | DD | |
| DIR | −0.007*** | −0.008*** | ||||
| (−4.708) | (−6.838) | |||||
| CEOIR | −0.012*** | −0.010*** | ||||
| (−6.200) | (−7.628) | |||||
| EMPIR | 0.004 | −0.001 | ||||
| (0.838) | (−0.239) | |||||
| LNS | 0.082*** | 0.053*** | 0.093*** | 0.130*** | 0.117*** | 0.146*** |
| (7.013) | (4.200) | (8.084) | (10.537) | (8.986) | (12.035) | |
| K/S | 0.728*** | 0.723*** | 0.742*** | 0.730*** | 0.720*** | 0.744*** |
| (11.682) | (10.820) | (11.912) | (14.382) | (13.356) | (14.669) | |
| Y/S | 6.492*** | 6.245*** | 6.486*** | 3.327*** | 3.442*** | 3.275*** |
| (25.804) | (23.219) | (25.728) | (14.709) | (14.348) | (14.462) | |
| R&D/K | 0.024*** | 0.021*** | 0.024*** | 0.004 | 0.003 | 0.005 |
| (3.204) | (2.712) | (3.156) | (0.971) | (0.630) | (1.069) | |
| RDUM | 0.344 | −0.318 | 0.387 | 1.489 | 1.473 | 1.591 |
| (0.471) | (−0.369) | (0.530) | (0.876) | (0.863) | (0.935) | |
| I/K | −0.357*** | −0.321*** | −0.375*** | −0.080*** | −0.078*** | −0.080*** |
| (−4.978) | (−4.339) | (−5.215) | (−2.963) | (−2.828) | (−2.951) | |
| ROA | 0.026*** | 0.027*** | 0.024*** | 0.033*** | 0.032*** | 0.031*** |
| (9.280) | (9.269) | (8.698) | (13.013) | (12.058) | (12.483) | |
| LEVERAGE | −6.680*** | −6.664*** | −6.718*** | −5.199*** | −5.228*** | −5.248*** |
| (−66.608) | (−61.067) | (−67.344) | (−66.300) | (−62.644) | (−67.101) | |
| Age | 0.129*** | 0.108*** | 0.164*** | −0.047** | −0.040* | −0.004 |
| (6.088) | (4.585) | (8.203) | (−2.457) | (−1.931) | (−0.226) | |
| Constant | 3.430*** | 4.444*** | 3.119*** | 1.940 | 2.062 | 1.498 |
| (4.590) | (5.058) | (4.178) | (1.136) | (1.203) | (0.876) | |
| Observations | 15,990 | 13,789 | 16,024 | 20,119 | 17,822 | 20,121 |
| 0.605 | 0.610 | 0.604 | 0.508 | 0.517 | 0.507 | |
| Firm fixed effect | Yes | Yes | Yes | Yes | Yes | Yes |
| Year effects | Yes | Yes | Yes | Yes | Yes | Yes |
| 27.04 | 22.18 | 28.26 | ||||
| Prob > | 0.000 | 0.000 | 0.000 | |||
Note(s): Table 8 reports estimates from regression results for analyzing the moderating impact Institutional ownership on the relationship between insider ownership and firm default risk. High institutional ownership and low institutional ownership indicate the below and above median value of institutional ownership level, adjacent to strong and weak external governance. Columns 1–3 show results for firms with high institutional ownership and columns 4–6 show results for firms with less than median institutional ownership. T-statistics are in parentheses. Definitions of all variables are provided in Appendix. Superscripts ***, ** and * denotes statistical significance at 1, 5 and 10% level, respectively
Source(s): Table created by the authors