摘要：We study the effect of foreign ownership on firm valuation through strategic corporate decisions related to investment and payouts. Using data from Japan, we find evidence that foreign institutional investors lead to higher firm value through better and efficient investment and payout decisions. Our results indicate that through increased monitoring, foreign investors mitigate the possibility of sub-optimal investments and unnecessary payouts by the management. We also find that firms with increased foreign ownership use their cash reserves in ways that significantly compliments the operating performance. Furthermore, our results also support the conjecture of a recent decline in the influence of Japanese main banks on firm’s strategic decisions.
