초록 열기/닫기 버튼
We try to provide evidence on whether institutional investors induce managers to participate in firm innovation or to make myopic corporate policies by exploring the relationship between institutional ownership and firm innovation. Using manufacturing firms listed on two Korean stock markets from 2005 and 2017, we find positive relationships between institutional ownership and two innovation variables measured by the number of patent applications and the one minus the technological proximity. These relationships are robust even if we consider the fact that our two innovation measures have the nontrivial portions of firms with zeros by estimating Tobit regressions and the number of patent applications has the nature of non-negative and count variable by using Poisson and negative binomial regressions. We also document robust results from eliminating the differences between characteristics of firms with versus without institutional ownership by a propensity score matching, and from controlling for a reverse causality between institutional ownership and innovation variables by two-stage regressions using an instrumental variable. These findings indicate that institutional investors encourage managers in Korean listed firms to participate in firm innovation with long-term nature and high probability of failure through their monitoring and information acquisition activities.
