Are institutional investors myopic? A time‐series study of four technology‐driven industries | Zendy

Hansen Gary S. | Zendy; Hill Charles W. L. | Zendy

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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.

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