In this study we use instrumental variables in the form of 3SLS regression models to
capture cross-equation effects, as error terms of individual equations in the system are
assumed to be contemporaneously correlated. Also, the 3SLS estimation technique is more
suitable for cross-sectional studies, where some of the institutional investors own multiple
equity stakes in different firms across industries with different levels of risk. As a result,
institutional ownership, risk, and performance issues can affect each other in various ways.
These interactions can be captured through the 3SLS estimation technique.