Economics at your fingertips  

The power of sharing: Evidence from institutional investor cross-ownership and corporate innovation

Kaijuan Gao, Hanxiao Shen, Xi Gao and Kam C. Chan

International Review of Economics & Finance, 2019, vol. 63, issue C, 284-296

Abstract: We examine the impact of institutional investor cross-ownership in the same industry (IICO) on corporate innovation. Previous studies suggest that there are pros and cons of IICO. Using a sample of Chinese firms, we document that IICO positively affects corporate innovation, which is consistent with the knowledge-sharing and monitoring hypothesis. Our findings are robust to alternative specifications of IICO and innovation, alternative estimation methods, and after accounting for endogeneity. Further analyses suggest that when firms have highly concentrated ownership (in terms of large shareholders) or the check-and-balance among large shareholders is weak, the impact of IICO on innovation is more pronounced; which corroborate with the underlying logic of enhancing monitoring in the presence of IICO. In terms of knowledge-sharing, we find that the impact of IICO on innovation is more pronounced when a firm faces highly competitive product market, which corroborates with the logic that institutional investors are able to bring knowhow from one firm to benefit another firm.

Keywords: Institutional investor; Cross ownership; Innovation (search for similar items in EconPapers)
JEL-codes: G01 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.iref.2019.01.008

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-07-01
Handle: RePEc:eee:reveco:v:63:y:2019:i:c:p:284-296