We test whether institutional investors' demand relates to past arbitrage activity in the form of short interest. We find that changes in short interest positively predict institutional demand. Examining the reason for the positive relationship, we find that institutions do not appear to demand...

The extant literature shows that institutional investors engage in corporate governance to enhance a firm's long-term value. Measuring firm performance using the F-Score, we examine the persistent monitoring role of institutional investors and identify the financial aspects of a firm that...