Investigation of Prudent Investment Hypothesis in ISE

Aim of this study is to examine whether institutional investors pursue prudent investment policy in ISE. Empirical analysis is performed by examining the difference among various firm characteristics of company portfolios constructed according to institutional ownership for the years, 2005, 2006 and 2007. Firm characteristics are market value, leverage ratio, turnover ratio, standard deviation of stock returns and return-on-assets. Analysis results suggest that institutional investors invest prudently in ISE companies. Institutional investors seem to prefer companies with big scale, high level of return-on-assets, low level of total risk, stock liquidity, and leverage ratio.