Needles, Abigail Marian (2018-08). Evidence on the Governance Role and Investment Strategy Performance of Boutique Institutional Investors. Doctoral Dissertation. Thesis uri icon

abstract

  • I identify an unexplored type of institutional investor (equity boutiques) that are characterized by their relatively small size but highly concentrated investment strategy. This concentrated strategy suggests that boutiques have the incentive to monitor management, but their limited assets under management cast doubt on whether they will be influential. In the context of discretionary investment decisions, I find evidence that boutiques oversee management by curbing myopia. Even though boutiques are small, they still appear to be influencial. Empirical evidence suggests that this influence comes, in part, from their expertise, which is heeded by other institutional investors. I also examine whether boutique investors earn abnormal returns on their investments and provide insights into the potential sources of those returns. More specifically, consistent with the notion that boutiques have expertise and an information advantage, I find that boutiques earn abnormal returns and that these returns are earned in part by exploiting information incremental to publicly available information.
  • I identify an unexplored type of institutional investor (equity boutiques) that are characterized
    by their relatively small size but highly concentrated investment strategy. This concentrated strategy
    suggests that boutiques have the incentive to monitor management, but their limited assets
    under management cast doubt on whether they will be influential. In the context of discretionary
    investment decisions, I find evidence that boutiques oversee management by curbing myopia. Even
    though boutiques are small, they still appear to be influencial. Empirical evidence suggests that
    this influence comes, in part, from their expertise, which is heeded by other institutional investors.
    I also examine whether boutique investors earn abnormal returns on their investments and provide
    insights into the potential sources of those returns. More specifically, consistent with the notion
    that boutiques have expertise and an information advantage, I find that boutiques earn abnormal
    returns and that these returns are earned in part by exploiting information incremental to publicly
    available information.

publication date

  • August 2018