Do company visits by institutional investors mitigate managerial myopia in R&D investment? Evidence from China

2021 ◽  
pp. 100694
Author(s):  
Yonggen Luo ◽  
Huiying Wu ◽  
Sammy Xiaoyan Ying ◽  
Qiuping Peng
Keyword(s):  
Institutional Investors ◽  
Managerial Myopia ◽  
D Investment

scholarly journals Role of Foreign and Domestic Institutional Investors in Corporate Sustainability: Focusing on R&D Investment

2020 ◽  
Vol 12 (20) ◽  
pp. 8754 ◽  
Author(s):  
Ilhang Shin ◽  
Sorah Park
Keyword(s):  
Institutional Investors ◽  
Corporate Sustainability ◽  
Institutional Ownership ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Least Squares Regression ◽  
Variable Approach ◽  
Managerial Myopia ◽  
D Investment

This paper examines the effects of ownership by foreign and domestic institutional investors on corporate sustainability by focusing on the level of research and development (R&D) investment. Long-term investment in R&D is crucial for companies that seek to generate sustainable growth. Ordinary least-squares regression is performed on a sample of Korean listed companies. The main test with both foreign and domestic institutional ownership is based on a study period from 2001 to 2004. The results indicate that firms with higher levels of foreign institutional ownership exhibit greater levels of corporate R&D activities, while the ownership by domestic institutions has no significant influence on firms’ R&D investment. An additional test with foreign institutional ownership data is based on an extended study period from 2001 to 2014, and shows that foreign institutional ownership is positively related to firms’ R&D investment. This result survives the two-stage instrumental variable approach used to address endogeneity factors in foreign institutional ownership. Taken together, these findings suggest that foreign institutions can effectively monitor managerial myopia and promote corporate innovations.

Do institutional investors exacerbate managerial myopia?

2000 ◽  
Vol 6 (3) ◽  
pp. 307-329 ◽  
Author(s):  
Sunil Wahal ◽  
John J McConnell
Keyword(s):  
Institutional Investors ◽  
Managerial Myopia

scholarly journals Do Institutional Investors Aleviate Agency Costs in R&D Investment Decisions?

2017 ◽  
Vol 6 (3) ◽  
pp. 24
Author(s):  
Ricky William Scott
Keyword(s):  
Cash Flow ◽  
Institutional Investors ◽  
Agency Costs ◽  
Investment Decisions ◽  
Agency Problems ◽  
Free Cash Flow ◽  
Good Investment ◽  
Institutional Shareholders ◽  
Difference Gmm ◽  
D Investment

This study tests whether institutional investors encourage R&D investment in firms with potential agency problems. Firm and year fixed effect regressions and difference-GMM regressions are used to examine the effect of changes in institutional investor levels to subsequent changes in R&D investment levels. Increased institutional ownership leads to increased R&D investment and this relationship is stronger in firms more susceptible to agency problems. Agency-based free cash flow theory predicts that institutional investors will encourage R&D investment in firms with good investment opportunities, but they will not encourage R&D investment simply because a firm has higher free cash flow. My results support this prediction indicating that institutional investors help to control agency problems in R&D investment decisions. The results in this paper indicate that this may lead to a decrease in agency costs in R&D decisions, thus benefiting institutional and non-institutional shareholders.

Foreign Institutional Ownership and R&D Activities: Evidence from High-tech French Firms

2020 ◽  
pp. 097215092097812
Author(s):  
Sami Gharbi ◽  
Hidaya Othmani
Keyword(s):  
Firm Value ◽  
Panel Data Analysis ◽  
Institutional Ownership ◽  
Dynamic Panel Data ◽  
High Tech ◽  
Managerial Myopia ◽  
Risky Investment ◽  
The Impact ◽  
D Investment

Foreign institutional investors hold over one-fifth of the total market value of the French stock market. Thus, it is important to analyse their influence on corporate investment decisions. This study investigates the impact of foreign institutional ownership on R&D activities. We examine whether these investors enhance or impede R&D investment intensity. Dynamic panel data analysis is applied to a sample of listed French high-tech firms over the period 2008–2014. Our results show that foreign institutional ownership encourages R&D investment while domestic institutional ownership dampens it. Foreign institutional ownership can act as a monitoring mechanism that reduces managerial myopia and encourages long-term and risky investment to enhance firm value.

scholarly journals Institutional investors and R&D investment: an international comparison

2010 ◽  
Vol 7 (3) ◽  
pp. 44-56 ◽  
Author(s):  
Zouari-Hadiji Rim ◽  
Ghazi Zouari
Keyword(s):  
Empirical Study ◽  
Comparative Study ◽  
Mutual Funds ◽  
International Comparison ◽  
Institutional Investors ◽  
Institutional Context ◽  
Canonical Analysis ◽  
Type Of Institution ◽  
D Investment ◽  
National Systems

This article examines the involvement of institutional investors, as a heterogeneous entity in the management of the firm. Knowing the identity of these institutions (banks, pension funds and mutual funds) may be useful because of its different influences on the behavior of managers in R&D investment. In conducting a comparative study between different national systems of governance, we seek to identify the type of institution that can foster R&D investment. The empirical study is based on a sample of 531 U.S., Japanese and French firms for the period 2003-2007. The results of canonical analysis conducted show that investors have different effects on R&D investment according to the institutional context.

scholarly journals Different board structures and R&D: Evidence from Japanese corporation

2015 ◽  
Vol 11 (2) ◽  
pp. 171-201
Author(s):  
Takahiro Nishi
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Agency Theory ◽  
Institutional Investors ◽  
Board Composition ◽  
Board Structure ◽  
Specific Relationship ◽  
The Impact ◽  
D Investment

This study examines the effect of different board style and ownership, and board composition on R&D investment in Japanese corporation. I explore how different board structure contribute to R&D investment in varied way and the impact of different type of governance on R&D investment incorporation. I analyze it with 2010-2014 panel data regarding Japanese corporate governance. I found that different type of corporate governance make impacts on R&D in corporations indicating the specific relationship between corporate governance and R&D, not explained by agency theory. This study observed that Board composed of insider avoid interference of institutional investors by caring about investor’s interests.

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