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Monitoring institutional ownership and corporate innovation

Steve Miller, Bin Qiu, Bin Wang and Tina Yang

Journal of Empirical Finance, 2022, vol. 69, issue C, 144-165

Abstract: We document a positive effect of monitoring institutional ownership on firm innovation after controlling for traditional measures of institutional ownership. We further find that monitoring institutions enhance firm innovation by: (1) incentivizing CEO risk-taking and reducing intense board monitoring, (2) alleviating agency problems, (3) attenuating managerial career concerns, and (4) mitigating corporate misvaluation. Overall, our findings highlight the importance of considering institutions’ monitoring incentives when examining the outcomes of their portfolio firms’ activities associated with high information asymmetry.

Keywords: Monitoring; Institutional investors; Innovation; Patents; Citations (search for similar items in EconPapers)
JEL-codes: G30 O31 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:69:y:2022:i:c:p:144-165

DOI: 10.1016/j.jempfin.2022.09.004

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Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

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