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Does institutional short-termism matter with managerial myopia?

Yu-Fen Chen, Fu-Lai Lin and Sheng-Yung Yang ()

Journal of Business Research, 2015, vol. 68, issue 4, 845-850

Abstract: Literature regarding the impact of institutional investors on firm's research and development (R&D) expenses supports that institutional ownership facilitates managerial discretion on R&D expenses in the US. However, the scenario may change when considering institutional investment horizon. This study investigates whether managerial myopic investments on R&D exist in an emerging market, Taiwan, and whether institutional investing exacerbates managerial myopic behavior. Results indicate that corporate managers cut R&D spending to meet short-term earnings goals in Taiwan. Domestic institutional short-termism will intensify managerial myopia. Conversely, foreign institutional ownership acts as a buffer to facilitate R&D.

Keywords: Institutional short-termism; Managerial myopia; R&D expenses; Investment horizon; Portfolio turnover (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jbusres.2014.11.039

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Handle: RePEc:eee:jbrese:v:68:y:2015:i:4:p:845-850