Does institutional short-termism matter with managerial myopia?
Fu-Lai Lin and
Sheng-Yung Yang ()
Journal of Business Research, 2015, vol. 68, issue 4, 845-850
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)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:68:y:2015:i:4:p:845-850
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