Resource slack and institutional ownership: A DuPont analysis in an emerging market

Novaes, PVG; Lamounier, WM; Louzada, LC; Bressan, VGF; Pinheiro, LET

Resource slack and institutional ownership: A DuPont analysis in an emerging market

Novaes, PVG Lamounier, WM Louzada, LC Bressan, VGF Pinheiro, LET

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Publisher:: Elsevier
Publication Type:: Journal Article
Citation:: Research in International Business and Finance, 2025, 79, pp. 103067
Issue Date:: 2025-07

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Field	Value	Language
dc.contributor.author	Novaes, PVG
dc.contributor.author	Lamounier, WM
dc.contributor.author	Louzada, LC
dc.contributor.author	Bressan, VGF
dc.contributor.author	Pinheiro, LET
dc.date.accessioned	2026-04-07T07:50:53Z
dc.date.available	2026-04-07T07:50:53Z
dc.date.issued	2025-07
dc.identifier.citation	Research in International Business and Finance, 2025, 79, pp. 103067
dc.identifier.issn	0275-5319
dc.identifier.issn	1878-3384
dc.identifier.uri	http://hdl.handle.net/10453/194600
dc.description.abstract	This study examines resource slack (asset turnover, profit margin, leverage deviations from industry norms) on institutional ownership in Brazilian firms from 2010 to 2023. We document that, on average, institutional investors are drawn to firms with lower resource slack, especially in asset turnover, for operational stability and comparability. Similar preferences are observed when examining institutions that prioritize stronger relationships with firms, as evidenced by institutional stockholdings exceeding 5 ( relevant ), long-term ( dedicated ), and voting shares ( voting ). Moreover, while mutual funds prefer firms with lower resource slack, indicating conservative strategies focused on predictability, hedge funds target firms based on value orientations, viewing resource slack as a signal of potential performance gains. Our results are subjected to a comprehensive battery of endogeneity tests, including the use of instrumental variables and selection bias tests. In addition, we document the effect of a regulatory change on institutional ownership. The findings contribute to research on shareholder governance by highlighting the heterogeneity among institutional investors based on their incentives.
dc.language	English
dc.publisher	Elsevier
dc.relation.ispartof	Research in International Business and Finance
dc.relation.isbasedon	10.1016/j.ribaf.2025.103067
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	1502 Banking, Finance and Investment
dc.subject.classification	Finance
dc.subject.classification	3502 Banking, finance and investment
dc.subject.classification	3801 Applied economics
dc.title	Resource slack and institutional ownership: A DuPont analysis in an emerging market
dc.type	Journal Article
utslib.citation.volume	79
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	University of Technology Sydney
pubs.organisational-group	University of Technology Sydney/Business School
pubs.organisational-group	University of Technology Sydney/Business School/Business Related HDR Students
utslib.copyright.status	open_access	*
pubs.consider-herdc	true
dc.rights.license	This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). To view a copy of this license, visit https://creativecommons.org/licenses/by/4.0/
dc.date.updated	2026-04-07T07:50:51Z
pubs.publication-status	Published
pubs.volume	79

Abstract:

This study examines resource slack (asset turnover, profit margin, leverage deviations from industry norms) on institutional ownership in Brazilian firms from 2010 to 2023. We document that, on average, institutional investors are drawn to firms with lower resource slack, especially in asset turnover, for operational stability and comparability. Similar preferences are observed when examining institutions that prioritize stronger relationships with firms, as evidenced by institutional stockholdings exceeding 5 ( relevant ), long-term ( dedicated ), and voting shares ( voting ). Moreover, while mutual funds prefer firms with lower resource slack, indicating conservative strategies focused on predictability, hedge funds target firms based on value orientations, viewing resource slack as a signal of potential performance gains. Our results are subjected to a comprehensive battery of endogeneity tests, including the use of instrumental variables and selection bias tests. In addition, we document the effect of a regulatory change on institutional ownership. The findings contribute to research on shareholder governance by highlighting the heterogeneity among institutional investors based on their incentives.

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http://hdl.handle.net/10453/194600