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Are institutional investors myopic? A time‐series study of four technology‐driven industries
Author(s) -
Hansen Gary S.,
Hill Charles W. L.
Publication year - 1991
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250120102
Subject(s) - shareholder , institutional investor , profit (economics) , institutional change , empirical research , monetary economics , economics , business , empirical examination , finance , industrial organization , corporate governance , microeconomics , classical economics , philosophy , public administration , epistemology , political science
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.