Institutional Holding in Belgian Small Caps: Influence on Performance

Despite the lack of share liquidity which characterises small caps, our study shows the presence of institutional investors in 70 % of small caps on the basis of a sample of Belgian companies. Furthermore, they have a high average percentage of ownership (17 %). Moreover, this study highlights a negative and significant relationship between institutional ownership and the distribution of dividends. Institutional investors should consider small caps potential for growth. Insofar as institutional investors often have large blocks of shares, they are able to exercise some control and influence on companies decisions. Exercising this control, we talk about institutional activism as a phenomenon that seems to be widespread because institutional investors exercise more and more of their voting rights within companies in which they are involved (Mallin 2012). The relationship between activism and businesses performance is therefore an important question.