Investment preferences of institutional investors in Indonesia: A comparative analysis of pressure-sensitive and pressure-insensitive groups
-
Author(s)Dwi Prastowo DarmintoLink to ORCID Index: https://orcid.org/0009-0001-9187-2394
,
Abdulloh MubarokLink to ORCID Index: https://orcid.org/0009-0007-1302-8511
,
Nurmala AhmarLink to ORCID Index: https://orcid.org/0000-0001-8255-0513
-
DOIhttp://dx.doi.org/10.21511/imfi.22(1).2025.15
-
Article InfoVolume 22 2025, Issue #1, pp. 188-202
- 10 Views
-
2 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study investigates the investment preferences of institutional investors in Indonesia, focusing on the factors influencing stock selection. A comparative analysis is conducted between pressure-sensitive and pressure-insensitive investor groups to explore how different factors such as corporate social responsibility, corporate governance, shariah-compliant stocks, and financial indicators, including profitability, liquidity, and risk, affect their investment decisions. Data from 938 observations across 253 manufacturing companies listed on the Indonesia Stock Exchange were analyzed using panel data regression. The period was chosen because it captures a stable economic period in Indonesia, allowing for an accurate assessment of investment patterns without major external shocks. The results reveal that institutional investors favor stocks listed on the Indonesia Shariah Stock Index (ISSI), perceived as low-risk investments. Pressure-sensitive investors, such as banks and insurance companies, prefer companies with close business affiliations, while pressure-insensitive investors, such as mutual funds and pension funds, prioritize financial performance and corporate governance. Additionally, the study finds that the debt-to-asset ratio and inclusion in the Shariah index significantly affect institutional ownership, indicating a preference for leveraged companies with ethical investment profiles. This study provides a deeper understanding of the varying preferences between institutional investor groups, highlighting the significance of ethical considerations, financial stability, and corporate governance in emerging markets.
- Keywords
-
JEL Classification (Paper profile tab)G11, G14, M41
-
References43
-
Tables3
-
Figures0
-
- Table 1. Preferences of all institutional investors
- Table 2. Preferences of pressure-insensitive institutional investors
- Table 3. Preferences of pressure-sensitive institutional investors
-
- Ali, S. T., Ali, F., Khan, A., Yang, Z., Ullah, M., & Ayalew, M. M. (2021). Heterogenic Institutional Investors and Their Influence on Corporate Innovation: Evidence from a Transition Economy. South African Journal of Business Management, 52(1).
- Alodat, A. Y., Salleh, Z., Hashim, H. A., & Sulong, F. (2022). Corporate governance and firm performance: empirical evidence from Jordan. Journal of Financial Reporting and Accounting, 20(5), 866-896.
- Al-Najjar, B. (2010). Corporate governance and institutional ownership: Evidence from Jordan. Corporate Governance, 10(2), 176-190.
- Asteriou, D., Pilbeam, K., & Pouliot, W. (2023). Does ESG Investing Pay-Off? An Analysis of the Eurozone Area Before and During the Covid-19 Pandemic. International Journal of Finance & Economics.
- Cahan, S. F., Chen, C., & Chen, L. (2017). Social Norms and CSR Performance. Journal of Business Ethics, 145(3), 493-508.
- Cao, J., Zhan, X., Zhang, W., & Zhang, Y. (2023). The Return Predictability of Carbon Emissions: Evidence from Hong Kong and Singapore. Pacific-Basin Finance Journal, 82, 102177.
- Cheng, X., Kong, D., Zheng, X., & Tang, Q. (2022). Do foreign investors crowd out sell-side analysts? Evidence from China. Financial Review, 57(4), 815-834.
- Cheng, X., Jiang, X., Kong, D., & Vigne, S. (2024). Shifting Stakeholders Logics: Foreign Institutional Ownership and Corporate Social Responsibility. Journal Business Ethics, 194, 165-183.
- Chen, T., Dong, H., & Lin, C. (2020). Institutional Shareholders and Corporate Social Responsibility. Journal of Financial Economics, 135(2), 483-504.
- Chen, Z., Da, Z., Huang, D., & Wang, L. (2023). Presidential economic approval rating and the cross-section of stock returns. Journal of Financial Economics, 147(1), 106-131.
- Chichernea, D. C., Petkevich, A., & Zykaj, B. B. (2023). Idiosyncratic volatility, institutional ownership, and investment horizon. European Financial Management, 21(4), 613-645.
- Corum, A. A., Malenko, A., & Malenko, N. (2023). Corporate Governance in the Presence of Active and Passive Delegated Investment. In SSRN Electronic Journal (695).
- Doidge, C., Dyck, A., Mahmudi, H., & Virani, A. (2019). Collective Action and Governance Activism. Review of Finance, 23(5), 893-933.
- Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do Institutional Investors Drive Corporate Social Responsibility? International Evidence. Journal of Financial Economics, 131(3), 693-714.
- Elyasiani, E., Jian, J., & Mao, C. (2021). Institutional ownership stability and the cost of debt. Journal of Financial Markets, 13(4), 475-500.
- Erhemjamts, O., & Huang, K. (2019). Institutional Ownership Horizon, Corporate Social Responsibility and Shareholder Value. Forthcoming, Journal of Business Study, 1-60.
- Ferri, S., Tron, A., Colantoni, F., & Savio, R. (2023). Sustainability Disclosure and IPO Performance: Exploring the Impact of ESG Reporting. Sustainability, 15(6), 5144.
- Forte, R., & Tavares, J. M. (2023). The relationship between debt and a firm’s performance: the impact of institutional factors. Managerial Finance, 45(9), 1272-1291.
- Franks, J. (2020). Institutional ownership and governance. Oxford Review of Economic Policy, 36(2), 258-274.
- Gati, V., Harymawan, I., & Nasih, M. (2024). Indonesia Shariah Stock Index (ISSI) firms and environmental, social, and governance (ESG) disclosure in Indonesia. Journal of Islamic Accounting and Business Research, ahead-of-print(ahead-of-print).
- Giordino, D., Jabeen, F., Nirino, N., & Bresciani, S. (2024). Institutional investors’ ownership concentration and its effect on CSR disclosure and transparency of United Nations Sustainable Development Goals (SDGs). Technological Forecasting and Social Change, 200(1). 123229.
- Gunardi, A., Alghifari, E. S., & Susiadi, A. A. (2021). The impact of sales growth on institutional ownership: evidence from emerging markets. Journal of Risk and Financial Management, 15(2), 12.
- Harjoto, M., Jo, H., & Kim, Y. (2017). Is Institutional Ownership Related to Corporate Social Responsibility? The Nonlinear Relation and Its Implication for Stock Return Volatility. Journal of Business Ethics, 146(1), 77-109.
- Hutchinson, M., Seamer, M., & Chapple, L. (2013). Institutional Investors, Risk/Performance and Corporate Governance: Practical Lessons from the Global Financial Crisis. International Journal of Accounting, Forthcoming, 50(1), 1-46.
- Ilyas, M., Mian, R. U., & Mian, A. (2024). International evidence on the monitoring role of foreign institutional investors in corporate investment efficiency. International Journal of Managerial Finance, 20(4), 967-997.
- Khan, S. U. D., Arshad Khan, M., Khan, M. J., & Khan, M. Y. (2021). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 17(8), 1973-1997.
- Kokotec, I. Đ., Orsag, S., & Čalopa, M. K. (2021). The role of institutional investors in corporate governance of their portfolio companies – the case of Croatia. Croatian Economic Survey, 23(2), 105-129.
- Lusyana, D., & Sherif, M. (2017). Shariah-compliant investments and stock returns: evidence from the Indonesian stock market. Journal of Islamic Accounting and Business Study, 8(2), 143-160.
- Michopoulos, I., Bougias, A., Episcopos, A., & Livanis, E. (2024). Measuring ESG risk premia with contingent claims. The European Journal of Finance, 1-24.
- Mushawir, Wafa, S. Z., & Mubarok, A. (2023). Analisis Karakteristik Perusahaan yang Mempengaruhi Kepemilikan Investor Institusi [Analysis of Company Characteristics that Affect Institutional Investor Ownership]. Permana: Jurnal Perpajakan, Manajemen, Dan Akuntansi, 15(1), 80-93. (In Indonesian).
- Nguyen, S. L., Pham, C. D., Truong, T. V., Phi, T. V., Le, L. T., & Vu, T. T. T. (2023). Relationship between capital structure and firm profitability: evidence from Vietnamese listed companies. International Journal of Financial Studies, 11(1), 45.
- Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1), 74-95.
- Panda, B., Puri, V., & Tiwari, A. K. (2024). How does ownership of insiders and institutions affect future value? Influence of country-level governance. International Journal Disclosure Governance.
- Ramdhony, D., Gunessee, S., Mooneeapen, O., & Boolaky, P. (2024). CSR disclosure and ownership structure: Insights from a dynamic empirical framework using an emerging economy context. Journal of Applied Accounting Research, 25(3), 524-546.
- Suteja, J., Gunardi, A., Alghifari, E.S., Susiadi, A. A., & Yulianti, A. S. (2023). Investment Decision and Firm Value: Moderating Effects of Corporate Social Responsibility and Profitability of Non-Financial Sector Companies on the Indonesia Stock Exchange. Journal of Risk and Financial Management, 16(1), 40.
- Tarighi, H., Appolloni, A., Shirzad, A., & Azad, A. (2023). Corporate Social Responsibility Disclosure (CSRD) and Financial Distress Risk (FDR): Does Institutional Ownership Matter? Sustainability, 14(2), 742.
- Utami, W., Surjandari, D. A., & Akbar, T. (2021). A Study on Financial Statements Quality Based on Characteristic of Board Commissioners and Audit committee: An Explanatory Sequential Mixed-Method Approach. Journal of Organization Studies and Innovation, 8(2), 40-56.
- Velte, P. (2023). Which institutional investors drive corporate sustainability? A systematic literature review. Business Strategy and the Environment, 32(1), 42-71.
- Velte, P. (2024). Institutional ownership and board governance. A structured literature review on the heterogeneous monitoring role of institutional investors. Corporate Governance, 24(2). 225-263.
- Vengesai, E. (2023). Unveiling the role of investment tangibility on financial leverage: insights from African-listed firms. Risks, 11(11), 192.
- Vinjamury, R. S. (2021). Corporate governance, institutional investor type and firm performance: Evidence from an emerging market. Corporate Governance and Sustainability Review, 5(4), 20–27.
- Wang, Y., Lin, Y., Fu, X., & Chen, S. (2023). Institutional ownership heterogeneity and ESG performance: Evidence from China. Finance Research Letters, 51(C).
- Yang, L., Huang, X., & Song, X. (2024). The Role of Passive Investors in Corporate Governance and Socially Responsible Investing: Evidence from Shareholder Proposals. Sustainability, 16(1).
-
Financial sector and manufacturing sector performance: evidence from Nigeria
Abiola John Asaleye ,
Joseph Ibrahim Adama ,
Joseph Olufemi Ogunjobi
doi: http://dx.doi.org/10.21511/imfi.15(3).2018.03
Investment Management and Financial Innovations Volume 15, 2018 Issue #3 pp. 35-48 Views: 2562 Downloads: 376 TO CITE АНОТАЦІЯNigerian economy depends on oil as the major source of revenue, failure to diversify the revenue base has raised questions about its sustainability and implication on the economy. This study uses market capitalization, broad money stock, credit to private sector, prime interest rate and deposit liability as proxies for the financial sector, while output in the manufacturing sector and manufacturing employment are used as proxies for manufacturing performance. The study examines the causal effects, shock effect and long-run impact using Granger Non-Causality, Vector Error Correction Model, and Dynamic Ordinary Least Square method, respectively. The results showed unidirectional causality, confirming the hypothesis of the ‘supply-leading view’ and ‘demand-following view’ except for market capitalization and output in the manufacturing sector, where independence was observed. The variance decomposition shows that the forecast error shock of credit to private sector and prime interest rate show more variations in manufacturing sector performance than other financial indicators. The long-run result using output in manufacturing sector as dependent variable shows a positive significant relationship with other financial sector indicators, except for broad money stock and deposit liability. This study recommended credit channel for transmission of monetary policy using interest rate to improve the performance of manufacturing sector, among others.
-
The role of foreign direct investment and trade on carbon emissions in Turkey
Gizem Kaya , M. Özgür Kayalica 
,
Merve Kumaş ,
Burc Ulengin
doi: http://dx.doi.org/10.21511/ee.08(1).2017.01
Environmental Economics Volume 8, 2017 Issue #1 pp. 8-17 Views: 2070 Downloads: 1005 TO CITE АНОТАЦІЯThis study aims to observe the long run and short run effects of gross domestic product, foreign direct investment inflows and trade on CO2 emissions and causality relationships between these factors, using annual data for the period of 1974-2010. The empirical results demonstrate that the inverted U-shaped relationship of environmental Kuznets curve is valid for Turkey. In addition, there are positive long run effects of foreign direct investment and trade openness on CO2 emissions. The authors also find a bidirectional causality relationship between CO2 emission and FDI.
-
Modeling of FinTech market development (on the example of Ukraine)
Alina Bukhtiarova ,
Arsen Hayriyan ,
Nikol Bort ,
Andrii Semenog
doi: http://dx.doi.org/10.21511/im.14(4).2018.03
FinTech startups and services are one of the most dynamic segments of the modern economy. New financial technologies have already attracted many investors and form millions of budgets. Changing the traditional financial services concept, FinTech companies formed a new niche within the financial services market, the dynamic development of which determines the relevance of the development and implementation of an effective regulatory and oversight system.
The purpose of the article is to develop an economic and mathematical model for forecasting the development of the FinTech market on the example of Ukraine. In order to study the development of the FinTech industry, a multiple regression model was presented. The model describes the dependence of the total investment value of FinTech from venture investments in financial technology, venture investments in other technologies and venture investments in online lending. Based on this model, the effect of attracting investments with new FinTech projects on the total volume of investments in the industry was clarified. According to the model, with a change in investments in FinTech by 1%, the total rate of venture investments decreases by 0.03, funds in new projects of other companies grow by 0.05, and venture investments in online lending increase by 0.89. According to the analysis of regulatory legislation in the foreign countries of the FinTech services sphere, it was found that the regulation of most of the risks associated with the development of FinTech services falls within the competence of different supervisory authorities, requiring cross-sectoral cooperation between public institutions.
