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Corporate myopia in a blockholder setting

Carlsson, Jesper LU and Siöstedt, Mark LU (2018) BUSN79 20181
Department of Business Administration
Abstract
The purpose of this paper is to investigate whether the fraction of shares owned by institutional investors causes more or less myopia than other investors. Moreover, we look into the role of blockholders and ownership concentration and their effects.

The methodology of this paper consists of a level regression model and a first-difference regression model where the dependent variable R&D-to-Revenue and Capex-to-Assets were regressed on several independent variables that measures institutional ownership, ownership concentration, the presence of blockholders and several control variables. We also make a regression where we divide institutional ownership into different tertiles depending on their portfolio turnover.

The theoretical... (More)
The purpose of this paper is to investigate whether the fraction of shares owned by institutional investors causes more or less myopia than other investors. Moreover, we look into the role of blockholders and ownership concentration and their effects.

The methodology of this paper consists of a level regression model and a first-difference regression model where the dependent variable R&D-to-Revenue and Capex-to-Assets were regressed on several independent variables that measures institutional ownership, ownership concentration, the presence of blockholders and several control variables. We also make a regression where we divide institutional ownership into different tertiles depending on their portfolio turnover.

The theoretical perspective of this study has mainly been of the principal-agent problem and information asymmetry. These theories have been used to investigate exacerbation of the natural patience, the buffer hypothesis and efficient
monitoring.

The sample consists of all firms in the OMX Stockholm All-Share Index (OMXSPI) that have reported R&D and/or capital expenditures figures for the time period 2002 to 2017. Data has been collected mainly from Thomson Reuters Eikon, while
some missing data has been complemented with data from Bloomberg.

From our study we find no empirical evidence that institutional ownership
influence R&D and capital expenditures levels of firms. Furtherly, we find no evidence that the portfolio turnover of institutional investors influences the R&D and capital expenditures levels of firms. We can conclude that the presence of blockholders have a statistically significant negative relationship with R&D and capital expenditures levels while ownership concentration, measured as HHI, does not seem to explain these differences. (Less)
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author
Carlsson, Jesper LU and Siöstedt, Mark LU
supervisor
organization
course
BUSN79 20181
year
type
H1 - Master's Degree (One Year)
subject
keywords
Myopia, corporate myopia, managerial myopia, short-termism, institutional investors, blockholders, principal-agent theory, information asymmetry
language
English
id
8955914
date added to LUP
2018-08-27 08:46:17
date last changed
2018-08-27 08:46:17
@misc{8955914,
  abstract     = {The purpose of this paper is to investigate whether the fraction of shares owned by institutional investors causes more or less myopia than other investors. Moreover, we look into the role of blockholders and ownership concentration and their effects.

The methodology of this paper consists of a level regression model and a first-difference regression model where the dependent variable R&D-to-Revenue and Capex-to-Assets were regressed on several independent variables that measures institutional ownership, ownership concentration, the presence of blockholders and several control variables. We also make a regression where we divide institutional ownership into different tertiles depending on their portfolio turnover.

The theoretical perspective of this study has mainly been of the principal-agent problem and information asymmetry. These theories have been used to investigate exacerbation of the natural patience, the buffer hypothesis and efficient 
monitoring.

The sample consists of all firms in the OMX Stockholm All-Share Index (OMXSPI) that have reported R&D and/or capital expenditures figures for the time period 2002 to 2017. Data has been collected mainly from Thomson Reuters Eikon, while
some missing data has been complemented with data from Bloomberg.

From our study we find no empirical evidence that institutional ownership
influence R&D and capital expenditures levels of firms. Furtherly, we find no evidence that the portfolio turnover of institutional investors influences the R&D and capital expenditures levels of firms. We can conclude that the presence of blockholders have a statistically significant negative relationship with R&D and capital expenditures levels while ownership concentration, measured as HHI, does not seem to explain these differences.},
  author       = {Carlsson, Jesper and Siöstedt, Mark},
  keyword      = {Myopia,corporate myopia,managerial myopia,short-termism,institutional investors,blockholders,principal-agent theory,information asymmetry},
  language     = {eng},
  note         = {Student Paper},
  title        = {Corporate myopia in a blockholder setting},
  year         = {2018},
}