Robustness Report on "Innovation and Institutional Ownership", by Aghion, Philippe, John van Reenen, and Luigi Zingales (2013)

Douglas Campbell, Abel Brodeur, Magnus Johannesson, Joseph Kopecky, Lester Lusher and Nikita Tsoy

No 134, I4R Discussion Paper Series from The Institute for Replication (I4R)

Abstract: Aghion, Van Reenen and Zingales (2013) find that institutional ownership causes an increase in innovation as measured by citation-weighted patent counts. To identify a causal effect, they use membership in the S&P 500 as an instrument for institutional ownership in a panel regression. We first replicate all regression tables in Aghion et al., and then test for robustness, mainly by adding in firm and sector*year fixed effects. We find that the positive relationship between institutional ownership and innovation is robust in 22% of robustness checks. On average, 2nd stage z-scores were just 42.7% of the original study. We find that when we include firm fixed effects, membership in the S&P 500 actually has a negative (though significant only at the 10% level) impact on institutional ownership (among non-indexed funds). Lastly, we find that the original control-function IV regression suffers from multi-collinearity, complicating inference.

Keywords: Innovation; Patents; Institutional Investment (search for similar items in EconPapers)
JEL-codes: G23 G32 L25 M10 O31 O34 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-cfn, nep-ino, nep-ipr and nep-sbm
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