Ownership Structure, Governance, and Innovation: Evidence from Italy

Raoul Minetti, Pierluigi Murro and Monica Paiella

No 10, Working Papers from Department of the Treasury, Ministry of the Economy and of Finance

Abstract: This paper tests the impact of firms’ ownership structure on firms’ innovation decisions using a rich dataset of about 20,000 Italian manufacturers. After accounting for its possible endogeneity, we find that ownership concentration negatively affects the probability of innovation, especially by reducing firms’ R&D effort. The analysis reveals that conflicts of interest between large and minority shareholders are a determinant of the negative effect of ownership concentration on innovation. Moreover, risk aversion induced by lack of financial or industrial diversification appears to be an additional source of large shareholders’ reluctance to innovate. Once we distinguish across types of shareholders, we uncover some evidence that families support innovation more than financial institutions, but that the benefits of financial institutions for technological change increase with their equity stakes. Collectively, the findings suggest that innovation is a channel through which agency problems among shareholders influence firm performance.

Keywords: Ownership; Agency Problems; Technological Change (search for similar items in EconPapers)
JEL-codes: G32 O3 (search for similar items in EconPapers)
Pages: 41
Date: 2012-10
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://redazionecms.tesoro.it/modules/documenti_it ... rs/WP_N._10-2012.pdf (application/pdf)

Related works:
Journal Article: Ownership structure, governance, and innovation (2015)
Working Paper: Ownership structure, governance, and innovation: Evidence from Italy (2011)
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: https://EconPapers.repec.org/RePEc:itt:wpaper:wp2012-10

Access Statistics for this paper

More papers in Working Papers from Department of the Treasury, Ministry of the Economy and of Finance Contact information at EDIRC.
Bibliographic data for series maintained by Michele Petrocelli ( this e-mail address is bad, please contact ).