Impact of Domestic and Foreign Institutional Ownership on Firm Value in Pakistan

Abstract

The relationship between institutional ownership and firm value is a complex and multi faceted topic. While some studies suggest a positive relationship, others find no significant effect or highlight the mediating role of other factors. This research focuses on the relationship between institutional ownership and firm value in non-financial and non utilities publicly listed companies in Pakistan between 2008 and 2018. Using Tobins-Q as a proxy for firm value, and foreign institutional ownership and domestic institutional ownership as independent variables alongside a number of control variables, this research finds that domestic institutional ownership is the primary driver for the negatively significant relationship between firm value and institutional ownership in Pakistan, with foreign institutional ownership having a positive but insignificant relationship with firm value.