Firm Innovation And Institutional Investment
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Firm Innovation And Institutional Investment
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Author : Nida Abdioglu
language : en
Publisher:
Release Date : 2013
Firm Innovation And Institutional Investment written by Nida Abdioglu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This paper investigates the effect of the Sarbanes-Oxley Act (SOX) on the relation between institutional ownership (IO) and firm innovation. We find that US firms investing in innovation attract more institutional capital post-SOX. Prior literature identifies two SOX effects on the average US firm that could drive this relation, that is, a decreased level of information asymmetry (direct effect) and the consequent increased market liquidity (indirect effect). Our findings overwhelmingly support the direct effect. In particular, we find that the positive relation between IO and innovation post-SOX is mainly driven by passive and dedicated institutional investors. These investors benefit greatly from a reduction in the firm's information asymmetry but receive little gain from improvements in market liquidity, given their long-term trading horizon. Our results are robust to different model specifications, including difference-in-differences tests, which alleviate concerns about the impact of confounding effects to our conclusions. Taken together, our findings indicate an important policy effect of SOX, namely, the strengthening of institutional investor support for firm innovation.
Institutional Investors Ownership Stability And Firms Innovation
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Author : Hamid Sakaki
language : en
Publisher:
Release Date : 2019
Institutional Investors Ownership Stability And Firms Innovation written by Hamid Sakaki and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
We examine the relationship between various measures of institutional ownership and investee firms' level of innovation as measured by the number of patents and patent citations. We find a direct association between the stability in the equity ownership of institutional investors and their investee firms' level of innovation. Our main finding would serve to reassure managers that they benefit from the support of long-term-oriented institutional investors who adopt a "buy and hold" investment philosophy as opposed to a "trading" philosophy. We also examine the association between the proportion of a firm's equity held by institutional investors and its innovation and find that it relies on the type of the investor. For instance, while there exists a positive association between mutual funds and firm innovation yet, the association is only positive for funds that actively manage their portfolios different from their benchmark index. Next, pressure-sensitive institutional investors' shareholdings are positively correlated with firm innovation; however, it is not necessarily the case for all the pressure-insensitive investors.
Three Essays On Institutional Investment
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Author : Nida Abdioglu
language : en
Publisher:
Release Date : 2012
Three Essays On Institutional Investment written by Nida Abdioglu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
This thesis investigates the investment preferences of institutional investors in the United States (US). In the second chapter, I analyse the impact of both firm and country-level determinants of foreign institutional investment. I find that the governance quality in a foreign institutional investor's (FII) home country is a determinant of their decision to invest in the US market. My findings indicate that investors who come from countries with governance setups similar to that of the US invest more in the United States. The investment levels though, are more pronounced for countries with governance setups just below that of the US. My results are consistent with both the 'flight to quality' and 'familiarity' arguments, and help reconcile prior contradictory empirical evidence. At the firm level, I present unequivocal evidence in favour of the familiarity argument. FII domiciled in countries with high governance quality prefer to invest in US firms with high corporate governance quality. In the third chapter, I investigate the impact of the Sarbanes-Oxley Act (SOX) on foreign institutional investment in the United States. I find that, post-SOX, FII increase their equity holdings in US listed firms. This result is mainly driven by passive, non-monitoring FII, who have the most to gain from the SOX-led reduction in firm information asymmetry, and the consequent reduction in the value of private information. The enactment of SOX appears to have changed the firm-level investment preferences of FII towards firms that would not be their traditional investment targets based on prudent man rules, e.g., smaller and riskier firms. In contrast to the extant literature, which mostly documents a negative SOX effect for the US markets, my chapter provides evidence of a positive SOX effect, namely the increase in foreign investment. In the fourth chapter, I examine the effect of SOX on the relation between firm innovation and institutional ownership. I find that US firms investing in innovation attract more institutional capital post-SOX. Prior literature highlights two SOX effects that could cause this result: a decreased level of information asymmetry (direct effect) and increased market liquidity (indirect effect). My findings support the direct effect, as I find that the positive relation between innovation and institutional ownership is driven by passive and dedicated institutional investors. A reduction in firms' information asymmetry is beneficial for these investors while they gain less from increased market liquidity. Overall, my results indicate that SOX is an important policy that has strengthened the institutional investor's support for firm innovation.
Early Stage Investments In New Technology Based Firms
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Author : Holger Ludewig
language : en
Publisher: diplom.de
Release Date : 1999-01-04
Early Stage Investments In New Technology Based Firms written by Holger Ludewig and has been published by diplom.de this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-01-04 with Business & Economics categories.
Inhaltsangabe:Abstract: In recent years the issue of early stage investment in new technology based firms has drawn considerable attention. Its relevance emerges from the rise of high technology industries in the global economy. As competition in established, mature industries all over the world is ever increasing, the importance of keeping up and increasing the speed of innovation to ensure competitiveness of companies and national wealth is widely recognized. Innovation may concern products or processes. It refers to the development of new proprietary knowledge, i. e. technology, which is embodied in marketable products or services. In as far as the added private knowledge increases the utility of a product to the customers, it adds value. Unless the new features of a product are matched by competitors, a company may earn innovation rents. Thus proprietary knowledge attained through innovation is an important source of strategic advantage. In a competitive, dynamic market, however innovation rents are not sustainable. Competitors will attempt to match and exceed the innovation advantage. This may be achieved by imitation or by adding other or more innovative features. Whereas following the product life cycle model initial growth may be steep and rents may be high for the first mover, imitators competing on price and other rivals competing on innovations, may inflate the monopolistic power of the proprietary knowledge. Striving to maintain and increase market shares and profitability, companies thus have a strong incentive to keep innovating. For new technology-based firms the importance of proprietary knowledge is particularly pronounced. These start-ups operate in a hostile competitive environment, characterized by high uncertainty, offering the potential for rapid growth and high profits on the upside, but also the substantial threat of incurring deep losses on the downside. Whereas large companies generally possess a diversified product portfolio and a host of strategic assets, small companies will need to compete on a single new product or service and the determination of its management team. Politicians, worried by high unemployment and budget deficits, lately fell in love with the high-technology start-ups for their ability to create jobs and ensure future tax revenues. New technology-based firms are drivers of structural change in the economy in that they are among the first to enter new high growth potential industries. For [...]
Firm Innovation In Emerging Markets
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Author : Meghana Ayyagari
language : en
Publisher: World Bank Publications
Release Date : 2012
Firm Innovation In Emerging Markets written by Meghana Ayyagari and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
The authors investigate the determinants of firm innovation in over 19,000 firms across 47 developing economies. They define the innovation process broadly, to include not only core innovation such as the introduction of new products and new technologies, but also other types of activities that promote knowledge transfers and adapt production processes. The authors find that more innovative firms are large exporting firms characterized by private ownership, highly educated managers with mid-level managerial experience, and access to external finance. In contrast, firms that do not innovate much are typically state-owned firms without foreign competitors. The identity of the controlling shareholder seems to be particularly important for core innovation, with those private firms whose controlling shareholder is a financial institution being the least innovative. While the use of external finance is associated with greater innovation by all private firms, it does not make state-owned firms more innovative. Financing from foreign banks is associated with higher levels of innovation compared with financing from domestic banks.
Financial Systems Corporate Investment In Innovation And Venture Capital
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Author : Anthony Bartzokas
language : en
Publisher: Edward Elgar Publishing
Release Date : 2004-01-01
Financial Systems Corporate Investment In Innovation And Venture Capital written by Anthony Bartzokas and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-01-01 with Business & Economics categories.
"Financial Systems, Corporate Investment in Innovation, and Venture Capital is a text for scholars and students of the theory and practice of financing innovation. It will also be a source for governments, NGOs, financial institutions and multilateral agencies interested in the practicalities of promoting technology-based small and medium enterprises."--BOOK JACKET.
Investor Exits Innovation And Entrepreneurial Firm Growth
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Author : National Research Council
language : en
Publisher: National Academies Press
Release Date : 2009-12-18
Investor Exits Innovation And Entrepreneurial Firm Growth written by National Research Council and has been published by National Academies Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-12-18 with Technology & Engineering categories.
The bursting of the dot-com bubble in 2001 coincided with an abrupt and lasting change in the development of entrepreneurial venture-backed firms in the United States. Previously, entrepreneurs and investors commonly took viable young firms public through initial public offerings. Since 2001, however, venture investors have more frequently exited by selling their companies to established corporations, usually for lower returns. There are concerns among some entrepreneurs, investors, and academics that this change has reduced the potential of young, entrepreneurial firms to contribute to innovation, job creation, international competitiveness, and economic growth. There are also claims that public policies, including securities regulation, have contributed to this result and should be modified or compensated for. In 2007 investors, entrepreneurs, and academic experts in economics, corporate finance, and law came together to consider the merits and feasibility of additional research addressing the change in investor exit strategies, its causes and consequences. During the 2007 workshop, summarized in this volume, participants identified several factors complicating systematic inquiry and suggested a number of research avenues that could be productive.
How Do Foreign Institutional Investors Enhance Firm Innovation
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Author : Hoang Luong
language : en
Publisher:
Release Date : 2017
How Do Foreign Institutional Investors Enhance Firm Innovation written by Hoang Luong and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
We examine the effect of foreign institutional investors on firm innovation. Using firm-level data across 26 non-U.S. economies between 2000 and 2010, we show that foreign institutional ownership has a positive, causal effect on firm innovation. We further explore three possible underlying mechanisms through which foreign institutions affect firm innovation: foreign institutions act as active monitors, provide insurance for firm managers against innovation failures, and promote knowledge spillovers from high-innovation economies. Our paper sheds new light on the real effects of foreign institutions on firm innovation.
Investor Engagement
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Author : Roderick Martin
language : en
Publisher: OUP Oxford
Release Date : 2007-07-05
Investor Engagement written by Roderick Martin and has been published by OUP Oxford this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-07-05 with Business & Economics categories.
The growth of shareholder value has been a major change in Western economies since the 1980s. This growth has reignited debates concerning relations between investors and managers. This book argues that investors are more than passive providers of finance, on whose behalf managers seek to maximize shareholder returns. Instead, many investors directly influence management practice, through investor engagement. The book examines the role of institutional investors and private equity firms, two types of investors with overlapping but different reasons for engagement. Questions addressed include: What are the incentives, and disincentives, for investment engagement? How is investor engagement organized? What areas of management practice are of particular concern to investors? The discussion shows in detail how private equity firms play a major role in developing new companies, beyond the provision of finance, especially in the IT, biotechnology, and pharmaceutical sectors. The discussion is primarily based on British and US research. The debate has wider international relevance, because there are strong pressures for establishing shareholder value as the international 'norm' for systems of corporate governance. Following a detailed discussion of Germany, the authors conclude that there is no inevitable trend to shareholder value: shareholder value depends upon complementary institutional arrangements in national business systems, which are far from universal. The book concludes with a critical analysis of the justifications for shareholder value and investor engagement, highlighting the weaknesses of both efficiency and equity justifications.
Do Blockholder Incentives Matter Evidence From Firm Innovation
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Author : Chinghung (Henry) Chang
language : en
Publisher:
Release Date : 2018
Do Blockholder Incentives Matter Evidence From Firm Innovation written by Chinghung (Henry) Chang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
We examine whether institutional investors with short-term incentives affect firms' innovation performance. We find that firms with a greater concentration of transient and quasi-indexer institutional investors are associated with lower innovation performance, as measured by patents and citations. To address potential endogeneity, we exploit the positive liquidity shocks brought by the decimalization in 1997 and 2001 and find consistent evidence. The negative effect of concentrated short-term institutional investors is strengthened when managers' own wealth is more sensitive to the stock price. In addition, firms with concentrated short-term investors are less likely to engage in explorative innovation. We nevertheless also find that the negative effect on innovation can be mitigated by sound corporate governance, as measured by the presence of independent directors, dedicated investors and product market competition. Overall, our findings support the view on institution-induced investment distortion.