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The effect of institutional ownership on firm innovation: Evidence from Chinese listed firms

Zhao Rong (), Xiaokai Wu and Philipp Boeing ()

No 17-005, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Monitoring by institutional investors can act as an important mechanism to promote firm innovation. By investigating Chinese listed firms' patenting between 2002 and 2011, we find that the presence of institutional investors enhances firm innovation. Consistent with the monitoring view, we further find that (1) the effect of institutional investors on firm patenting mainly comes from mutual funds; (2) the effect is more pronounced when market competition is more intense; (3) the effect exists among private- and minor state-owned enterprises, but not among major state-owned enterprises. The above findings are robust when innovation quality is examined.

Keywords: Institutional investor; Firm innovation; Patenting; Mutual funds; China (search for similar items in EconPapers)
JEL-codes: G20 G32 O31 O32 O33 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cna, nep-cse, nep-ino, nep-sbm, nep-tid and nep-tra
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