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Exit as governance: do blockholders affect corporate innovation in large US firms?
Author(s) -
Helling Axel R.,
Maury Benjamin,
Liljeblom Eva
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12509
Subject(s) - prosperity , market liquidity , corporate governance , agency (philosophy) , business , affect (linguistics) , investment (military) , monetary economics , sample (material) , term (time) , accounting , economics , finance , philosophy , linguistics , chemistry , physics , epistemology , chromatography , quantum mechanics , politics , political science , law , economic growth
Abstract Using a sample of large US firms, this study shows that blockholders in combination with liquidity can contribute positively to innovation (R&D investments). We contribute to the literature on managerial myopia that has focused mainly on large owners and their type (short‐term/long‐term). Our results are in line with recent theoretical studies arguing that blockholders in combination with market liquidity can mitigate managerial myopia, as suggested by the exit model of governance. The results indicate that blockholders can be efficient in resolving agency problems and that they can enhance long‐term prosperity, even when the individual blockholder investment horizon may not be long.