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Are institutional investors myopic? A time‐series study of four technology‐driven industries

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  • Gary S. Hansen
  • Charles W. L. Hill

Abstract

This paper examines the popular myth that managers in high‐technology industries are altering their critical R&D investments in response to the short‐term profit pressures of large institutional stockholders. The study entails an empirical examination of the relationship between R&D spending and institutional ownership over a 10‐year period for 129 firms based in four research‐intensive industries. Contrary to the view that institutional investors are having a damaging affect on R&D spending, after controlling for intervening effects the results suggest that higher levels of institutional ownership may be associated with greater R&D expenditures. A number of possible explanations for this finding are developed.

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  • Gary S. Hansen & Charles W. L. Hill, 1991. "Are institutional investors myopic? A time‐series study of four technology‐driven industries," Strategic Management Journal, Wiley Blackwell, vol. 12(1), pages 1-16, January.
    • Handle: RePEc:bla:stratm:v:12:y:1991:i:1:p:1-16
    DOI: 10.1002/smj.4250120102
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