The Role of Institutional Investors in Sweden

Sammanfattning

This study examines the role of institutional investors in the Swedish equity market. Using a comprehensive dataset spanning the years 2015 to 2024, we examine how different groups of institutional investors are associated with the firm value, operating performance, and investment discipline of Sweden-domiciled firms listed on the Swedish main market. Our results suggest that independent investors are positively associated with firm value (Tobin's Q), return on assets, net profit margin, and investment discipline. Simultaneously, we find that pressure-sensitive firms are negatively associated with firm value, return on assets and net profit margin. These results are likely due to effective monitoring by independent institutions. Furthermore, we investigate which firm-level characteristics are associated with institutional ownership and how these characteristics differ across institutional investor groups. We find that all institutional investor groups strongly favour large firms and avoid firms with poor governance, as measured by ownership concentration, results that are supported by previous research and theory.