THE INFLUENCE OF THE OWNERSHIP STRUCTURE ON THE PERFORMANCE OF INNOVATIVE COMPANIES IN THE US

Elena Karnoukhova (), Anastasia Stepanova () and Maria Kokoreva
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Elena Karnoukhova: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: Innovative companies are a major driver of the global economy. The typical major owner is an institutional investor. In recent years the stakes of institutional owners have increased, which should increase the role of institutional investors. Institutional investors, however, differ. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article we analyze the difference between technology and non-technology companies to find out the reason for the success of fast-growing corporations. This research uses a Generalized Least Square model on a sample of 12,565 firm-year observations 2004–15, to justify the assumption that different types of investors have different effects on the performance of innovative companies. The research reveals a distinction between the type of investor and the investor strategy. By focusing on the concentration of ownership, we demonstrate the performance effect on different blockholders. Our findings suggest, first, that grey investors decrease firm value; second, that passive independent institutions enhance firm performance in virtue of their active monitoring and long-term investment horizons; third, that innovative firms have different ownership patterns to traditional ones.

Keywords: ownership structure; institutional investors; innovative companies; ownership concentration (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2018
New Economics Papers: this item is included in nep-cfn, nep-eff, nep-ent and nep-sbm
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Published in WP BRP Series: Financial Economics / FE, November 2018, pages - 63

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