Pension Fund Investment and Firm Innovation

David Pinkus (), Dario Pozzoli and Cédric Schneider
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David Pinkus: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark, https://www.cbs.dk/forskning/institutter-centre/oekonomisk-institut/medarbejdere/dpieco

No 1-2024, Working Papers from Copenhagen Business School, Department of Economics

Abstract: We use a unique database on domestic pension fund investment to analyze the re-lationship between pension fund investment and innovation within Danish firms. We find a significant positive association between pension fund investment and various measures of innovation, including green technologies for climate change mitigation and adaptation. However, this relationship is much weaker in highly competitive indus-tries, suggesting that pension funds encourage innovation by monitoring and holding managers accountable. Our analysis also shows that pension funds foster innovation by providing stable long-term capital. Overall, our study highlights the important role of pension funds in driving firm innovation, particularly by reducing managerial slack and by supplying stable, long-term capital.

Keywords: Pension Fund Investment; Innovation; R&D (search for similar items in EconPapers)
JEL-codes: J24 J60 L20 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2024-01-17
New Economics Papers: this item is included in nep-age, nep-cse, nep-fdg, nep-ino, nep-sbm and nep-tid
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