The signaling roles of ownership and board structure for foreign institutional investors in the tourism industry

Foreign institutional capital performs a critical role in the development of the tourism industry. Little research has been conducted to understand how foreign institutional investors choose tourism firms from the governance perspective. The primary purpose of the current study is to bridge this research gap by examining the signaling roles of CEO ownership, domestic institutional ownership, and institutional directors in preferences of foreign institutional investors. Outcomes show foreign institutional investors are more likely to invest in tourism firms who have higher CEO ownership, lower domestic institutional ownership, and a higher level of institutional directors. Implications and limitations are accordingly discussed.