Institutional Ownership and Firm Innovation - A Swedish Study on the Impact of Institutional Ownership on R&D Activity
(2023) BUSN79 20231Department of Business Administration
- Abstract
- Purpose: The objective of this study is to investigate the relationship between institutional ownership and firm innovation in a Swedish and contemporary context.
Theoretical framework: The theoretical framework underlying this study is primarily based on the myopic institutions theory, which suggests that institutional investors have an inherent short-term focus that influences their attitude towards long-term investments such as R&D.
Methodology: This study employs multiple ordinary least squares (OLS) regressions to investigate the relationship between institutional ownership and firm innovation, measured by the proxy variable R&D-to-assets.
Empirical foundation: The complete data sample consists of 1059 firm observations from... (More) - Purpose: The objective of this study is to investigate the relationship between institutional ownership and firm innovation in a Swedish and contemporary context.
Theoretical framework: The theoretical framework underlying this study is primarily based on the myopic institutions theory, which suggests that institutional investors have an inherent short-term focus that influences their attitude towards long-term investments such as R&D.
Methodology: This study employs multiple ordinary least squares (OLS) regressions to investigate the relationship between institutional ownership and firm innovation, measured by the proxy variable R&D-to-assets.
Empirical foundation: The complete data sample consists of 1059 firm observations from the Swedish stock index OMXSPI, covering the period from 2012 to 2021.
Conclusions: The result of this study shows that institutional ownership has a statistically significant negative impact on firm innovation. This finding aligns with anecdotal evidence and the myopic institutions theory, which suggests that institutional investors prioritize short-term gains over long- term value creation. An additional model exploring the interaction between institutional ownership and firm size confirms the negative effects of both variables on R&D. However, surprisingly, the joint effect of institutional ownership and size amplifies resource allocation towards R&D. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9119879
- author
- Neubauer, Robert LU and Blomberg Persson, Carl LU
- supervisor
- organization
- course
- BUSN79 20231
- year
- 2023
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Institutional Ownership, Firm Innovation, R&D Expenditures, Myopic Investment Behavior, Long-Term Value Creation
- language
- English
- id
- 9119879
- date added to LUP
- 2023-09-12 16:14:52
- date last changed
- 2023-09-12 16:14:52
@misc{9119879,
abstract = {{Purpose: The objective of this study is to investigate the relationship between institutional ownership and firm innovation in a Swedish and contemporary context.
Theoretical framework: The theoretical framework underlying this study is primarily based on the myopic institutions theory, which suggests that institutional investors have an inherent short-term focus that influences their attitude towards long-term investments such as R&D.
Methodology: This study employs multiple ordinary least squares (OLS) regressions to investigate the relationship between institutional ownership and firm innovation, measured by the proxy variable R&D-to-assets.
Empirical foundation: The complete data sample consists of 1059 firm observations from the Swedish stock index OMXSPI, covering the period from 2012 to 2021.
Conclusions: The result of this study shows that institutional ownership has a statistically significant negative impact on firm innovation. This finding aligns with anecdotal evidence and the myopic institutions theory, which suggests that institutional investors prioritize short-term gains over long- term value creation. An additional model exploring the interaction between institutional ownership and firm size confirms the negative effects of both variables on R&D. However, surprisingly, the joint effect of institutional ownership and size amplifies resource allocation towards R&D.}},
author = {{Neubauer, Robert and Blomberg Persson, Carl}},
language = {{eng}},
note = {{Student Paper}},
title = {{Institutional Ownership and Firm Innovation - A Swedish Study on the Impact of Institutional Ownership on R&D Activity}},
year = {{2023}},
}