Changing Market Logics? The Pressure from Foreign Institutional Investors

• In Event: 4366 - Section on Global and Transnational Sociology Refereed Roundtables (1 hour)
  In Refereed Roundtable 60min: 12. Markets and Labor in the Global Economy

Abstract

This research examines how the logics of financialisation diffuse from shareholder value capitalisms to a stakeholder market, i.e. Taiwan in this case, and how conflicting market ideologies interact with each other. Specifically, this paper studies mergers and acquisitions, classical shareholder value strategies in the literature of Anglo-Saxon societies, but institutionally being disputed among East-Asian business cultures. This research argues that transnational actors and finance are the drives for the institutional change of firms. Using panel data of public firms listed on the Taiwan Stock Exchange from 1996 to 2016, primary findings suggest that foreign institutional investors as shareholders increase the likelihood of mergers and acquisitions of firms. Second, compared with firms that are controlled by families or alliances, corporations supervised by professional management are more inclined to adopt mergers and acquisitions. Finally, corporations with board members with financial background are more likely to adopt mergers and acquisitions. This research, therefore, contributes to the literature of institutional change and the mechanism of the diffusion of shareholder values and its consequences.

Author

• Shi-Rong Lee