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Does institutional ownership discourage investment in corporate R&D?

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  • Mishra, Chandra S.

Abstract

We examine the influence of institutional investor ownership in a firm on their investment in R&D. We find partial support for managerial myopia in that at a higher level of institutional ownership, we find managers cut back R&D investment. We find a positive relation between institutional holdings in a firm and their investment in R&D till the institutional holdings in the firm reaches a threshold. Our results are consistent with the notion that managerial myopia sets in as the managers yield to institutional pressure when the institutional ownership level exceeds a threshold. Our results suggest that managers become sensitive to the pressure from institutional investors when the institutional ownership crosses a threshold.

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  • Mishra, Chandra S., 2022. "Does institutional ownership discourage investment in corporate R&D?," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:tefoso:v:182:y:2022:i:c:s0040162522003614
    DOI: 10.1016/j.techfore.2022.121837
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