Title: Performance analysis of institutional shareholdings: an empirical study of top 50 non-financial listed firms in Sri Lanka

Authors: Nadarajah Sivathaasan; Kosgolla Anura Udayakumara

Addresses: University of Jaffna, P.O. Box. 57, Thirunelvely, Jaffna, Sri Lanka ' Department of Accountancy and Finance, Faculty of Management Studies, Rajarata University of Sri Lanka, Mihintale, Sri Lanka

Abstract: In this paper, we examine the impact of institutional shareholdings on the financial performance of the top 50 non-financial firms in Sri Lanka by analysing 215 firm-year observations over the five-year period from 2009 to 2013. We find evidence of a relatively higher proportion of institutional ownership on total shareholdings, leading to a negative impact on both measure of accounting (ROA) and market performance (Tobin's Q), which strongly fit into goodness of the given model at 1% level of significance. Also, we report the adjusted R2 of accounting performance significantly higher than that of market performance. Further, we document a positive and significant impact of leverage and liquidity on accounting and market performance respectively, whereas firm size shows a negative and significant influence on both performance measures. The findings of this study will assist policy makers, financial managers and investors in making investment decisions.

Keywords: institutional shareholdings; accounting performance; market performance; firm size; leverage; liquidity; performance evaluation; non-financial listed firms; Sri Lanka; financial performance; institutional ownership; ROA; return on assets; Tobin's Q; firm performance.

DOI: 10.1504/AAJFA.2015.073469

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.4, pp.295 - 310

Received: 13 Nov 2014
Accepted: 06 Jul 2015
Published online: 09 Dec 2015 *

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