How do common institutional investors adapt to early technology adoption?

Linghao Zhang, Xinwei Jin and Kai Wu

Journal of Business Research, 2025, vol. 199, issue C

Abstract: We examine how common institutional investors (CIIs) adapt to firms’ early adoption of intelligent manufacturing (IM) technologies in China. Employing a staggered difference-in-differences (DID) approach based on China’s IM Pilot projects, we find that CIIs significantly increase their ownership of firms after they adopt IM, suggesting strategic portfolio adjustments. This effect is stronger in industries with higher concentration and firms facing greater information asymmetry. We identify profitability and innovation as key channels through which early technology adoption influences CIIs’ investment decisions. Additionally, we demonstrate spillover effects from pilot to non-pilot firms through CIIs. Furthermore, the increase in common institutional ownership (CIO) resulting from early technology adoption reduces the stock price crash risk, demonstrating governance benefits. Our findings contribute to the understanding of CIO determinants and investor behavior in response to technological change, offering insights for policymakers on the intersection of technological advancement, ownership structures, and market competition.

Keywords: Early technology adoption; Institutional investors; Common ownership; Intelligent manufacturing; Corporate governance (search for similar items in EconPapers)
JEL-codes: G34 L25 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:199:y:2025:i:c:s0148296325003376

DOI: 10.1016/j.jbusres.2025.115514

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