Does institutional ownership discourage investment in corporate R&D?

Chandra S. Mishra

Technological Forecasting and Social Change, 2022, vol. 182, issue C

Abstract: We examine the influence of institutional investor ownership in a firm on their investment in R&D. We find partial support for managerial myopia in that at a higher level of institutional ownership, we find managers cut back R&D investment. We find a positive relation between institutional holdings in a firm and their investment in R&D till the institutional holdings in the firm reaches a threshold. Our results are consistent with the notion that managerial myopia sets in as the managers yield to institutional pressure when the institutional ownership level exceeds a threshold. Our results suggest that managers become sensitive to the pressure from institutional investors when the institutional ownership crosses a threshold.

Keywords: Corporate innovation; Managerial myopia; Institutional ownership (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:182:y:2022:i:c:s0040162522003614

DOI: 10.1016/j.techfore.2022.121837

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