Ningyue Liu

Ningyue Liu

PhD Thesis Title: Institutional Investors and Corporate Governance in Emerging Markets.

Supervisor: Professor Don Bredin

External Examiner: Professor Angela Black, University of Aberdeen


This thesis is constituted of three essays in corporate finance. The following two essays detail the empirical evidence on the behavior of foreign and domestic institutional investors in an emerging market, China, whereas the last essay is a cross country analysis. The first essay examines the investment preference of institutional investors, while the second essay investigates institutional investors’ shareholder activism. We extend our analysis to a number of developed and emerging markets in the third essay, which examines the effect of national culture on corporate financial decisions.

Essay one, Domestic and Foreign Institutional Investors’ Behavior in China, in chapter 3 compares the investment characteristics between foreign and domestic Chinese funds and analyzes the firm-level drivers that influence their allocation choices. The analysis reveals that foreign funds invest in firms that are significantly different from those favored by domestic funds. We also find that when making investment decisions, foreign funds tend to rely on a number of corporate governance indicators. Essay two, Institutional Investors, Over-investment and Corporate Performance, in chapter 4 focuses on a channel through which institutional investors affect corporate policy in China. Our results indicate that domestic funds mitigate the level of firms’ over-investment. We also find that there is a negative and statistically significant relationship between over-investment and firms’ performance. In the third essay, National Culture and Corporate Asset Allocation: Cash Holding or Investment?, in chapter 5, we investigate the role of national culture in corporate asset allocation decisions. We find that corporations hold greater levels of cash and invest less in countries where the people tend to avoid uncertainty and are culturally more masculine. The results also indicate that firms hold less cash and invest more in countries with larger power distance and greater individualism. Furthermore, the effect of culture on firm’s financial decisions is more pronounced in less sophisticated financial markets.

Discover our Rankings and Accreditations