| Institutional investors have become important players in today's financial markets and their increasing importance in corporate governance in the United States (U.S.) is further evidenced by the growing volume of corporate equity they control. The ownership structure/firm performance relationship has always been a subject of debate. Similarly, in the hospitality industry as of June 2002, institutional investors were estimated to own {dollar}2.3 billion, or 66.7% of total outstanding shares in PricewaterhouseCoopers' lodging universe.; This dissertation examines the impact of institutional ownership on firm performance as measured by a proxy for Tobin's Q in the restaurant, casino and hotel sectors from 1999-2003. Given the endogeneity of institutional ownership in the restaurant and casino sectors, firm performance in these areas is significantly dependent upon the percentage of institutional ownership, and vice versa. In the hotel sector, however, there is no significant systematic relationship between institutional ownership and firm performance, when all other firm-specific variables controlled.; This dissertation contributes to the body of the hospitality finance literature, particularly in the area of corporate governance, by identifying significant relationships between institutional ownership and firm performance in the restaurant and casino sectors. In addition, this study reveals that investing institutionally in the restaurant and casino sectors may help hospitality industry investors mitigate the agency problem caused by the separation of management from ownership. This, in turn, will enhance the value of the firms in the capital market. |
