| dc.description.abstract | This thesis investigates the impact of institutional ownership on idiosyncratic volatility in
Scandinavian stocks. The study applies CAPM regression analysis to estimate idiosyncratic
volatility, akin to Xu and Malkiel (2003). Utilizing a comprehensive dataset on institutional
ownership, the investigation is conducted by running fixed effects panel regressions on
Scandinavian stocks, more specifically stocks listed on the Copenhagen, Helsinki, Oslo, and
Stockholm exchanges, from 2017 to 2022. We regress idiosyncratic volatility on institutional
ownership lagged by one quarter, controlling for variables such as company size, leverage,
and stock turnover. Our findings suggest that there is a statistically significant and positive
relationship between institutional ownership and idiosyncratic volatility. These insights
challenge traditional portfolio theory and have significant implications for investors and
market regulators. For investors, our findings suggest a need to reconsider diversification
strategies in light of changing market dynamics. For regulators, proactive monitoring and
policy adaptation to counter the destabilizing nature of institutional ownership is essential
for maintaining market stability. The research conducted adds to the understanding of
the dynamics between institutional ownership and idiosyncratic volatility in Scandinavia. | en_US |
