Work

On “Innovation and institutional ownership”

Year: 2024

Type: article

Abstract: In their article “Innovation and Institutional Ownership”, Aghion et al. (2013) find that the rise in institutional stock ownership in the U.S. during the 1990s led to an increase in corporate innovation, as measured by patent and patent citation counts. Their article concludes that “contrary to the view that institutional ownership induces a short-term focus in managers, we find that their presence boosts innovation” (p. 302). Subsequent research has generally accepted this finding at face value. However, we uncover several critical issues with their data. Addressing these issues renders the results economically and statistically insignificant and, in some instances, even suggests a negative relationship between institutional ownership and U.S. innovation.

Source: Journal of Corporate Finance

DOI: 10.1016/j.jcorpfin.2024.102569

Authors: Markus Simeth, David Wehrheim

Institutions: Copenhagen Business School, IESE Business School

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,650

Funders: Ministerio de Ciencia, Innovación y Universidades, Danmarks Frie Forskningsfond, Danmarks Frie Forskningsfond