scholarly journals Role of Foreign and Domestic Institutional Investors in Corporate Sustainability: Focusing on R&D Investment

2020 ◽  
Vol 12 (20) ◽  
pp. 8754 ◽  
Author(s):  
Ilhang Shin ◽  
Sorah Park
Keyword(s):  
Institutional Investors ◽  
Corporate Sustainability ◽  
Institutional Ownership ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Least Squares Regression ◽  
Variable Approach ◽  
Managerial Myopia ◽  
D Investment

This paper examines the effects of ownership by foreign and domestic institutional investors on corporate sustainability by focusing on the level of research and development (R&D) investment. Long-term investment in R&D is crucial for companies that seek to generate sustainable growth. Ordinary least-squares regression is performed on a sample of Korean listed companies. The main test with both foreign and domestic institutional ownership is based on a study period from 2001 to 2004. The results indicate that firms with higher levels of foreign institutional ownership exhibit greater levels of corporate R&D activities, while the ownership by domestic institutions has no significant influence on firms’ R&D investment. An additional test with foreign institutional ownership data is based on an extended study period from 2001 to 2014, and shows that foreign institutional ownership is positively related to firms’ R&D investment. This result survives the two-stage instrumental variable approach used to address endogeneity factors in foreign institutional ownership. Taken together, these findings suggest that foreign institutions can effectively monitor managerial myopia and promote corporate innovations.

Foreign Institutional Ownership and R&D Activities: Evidence from High-tech French Firms

2020 ◽  
pp. 097215092097812
Author(s):  
Sami Gharbi ◽  
Hidaya Othmani
Keyword(s):  
Firm Value ◽  
Panel Data Analysis ◽  
Institutional Ownership ◽  
Dynamic Panel Data ◽  
High Tech ◽  
Managerial Myopia ◽  
Risky Investment ◽  
The Impact ◽  
D Investment

Foreign institutional investors hold over one-fifth of the total market value of the French stock market. Thus, it is important to analyse their influence on corporate investment decisions. This study investigates the impact of foreign institutional ownership on R&D activities. We examine whether these investors enhance or impede R&D investment intensity. Dynamic panel data analysis is applied to a sample of listed French high-tech firms over the period 2008–2014. Our results show that foreign institutional ownership encourages R&D investment while domestic institutional ownership dampens it. Foreign institutional ownership can act as a monitoring mechanism that reduces managerial myopia and encourages long-term and risky investment to enhance firm value.

Corporate Governance and Firm Innovation

2020 ◽  
pp. 155-181
Author(s):  
Mario Ossorio
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Institutional Ownership ◽  
Board Structure ◽  
Firm Innovation ◽  
Theoretical Perspectives ◽  
Key Factor ◽  
Relevant Variables ◽  
D Investment

Innovation is a key factor for firms' competitive advantage in the long-term and for their financial success. Scholars highlight the underinvestment problem with respect of R&D investment. This chapter focuses on two relevant variables of corporate governance that influence firms' innovation performance: firm ownership and board of directors. In the first section, the effect of ownership structure on R&D investment is analyzed. More specifically, the chapter will illustrate the effects of family ownership and institutional ownership on innovation investments. The second section explores the main theoretical perspectives investigating the functions of board of directors and the main board tasks. Lastly, three attributes of board structure and their effect on R&D investments are explored.

Relationship-specificity and real activities manipulation

2018 ◽  
Vol 44 (12) ◽  
pp. 1466-1483
Author(s):  
KoEun Park
Keyword(s):  
Earnings Quality ◽  
Product Market ◽  
Ordinary Least Squares ◽  
Investment Efficiency ◽  
Least Squares Regression ◽  
Content Type ◽  
Specific Investments ◽  
Variable Approach ◽  
Real Activities Manipulation ◽  
Operating Decisions

Purpose The purpose of this paper is to examine whether and how product market relationships are related to firms’ real activities manipulation (RAM), which refers to managers’ aggressive operating practices. Given the importance of suppliers’ relationship-specific investments to a firm’s competitiveness, the need for suppliers’ relationship-specific investments is expected to influence a firm’s RAM. Design/methodology/approach This paper adopts Nunn’s (2007) proxy for relationship-specificity and four proxies for RAM. It employs an ordinary least squares regression model to test whether a firm decreases RAM when it has greater need for supplier relationship-specific investments. It also uses an instrumental variable approach to address endogeneity and conducts cross-sectional analyses. Findings This study finds that, with the exception of RAM through sales manipulation, the importance of relationship-specific investments by suppliers is negatively associated with firms’ aggressive operating decisions. It also finds that the association between relationship-specificity and RAM is less pronounced for firms that have a greater market share but more pronounced for firms that are relatively young, consistent with the notion that a firm is more likely to be under pressure from its suppliers to reduce RAM when it has less competitive advantages. The results suggest that product market relationships play an important role in influencing managers’ aggressive operating decisions. Practical implications This study complements earlier work on earnings quality and has important implications for investors, regulators and other stakeholders who are concerned with corporate earnings quality. Originality/value This paper contributes to the literature on product market relationships and earnings quality and on financial reporting quality and investment efficiency.

scholarly journals Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

2021 ◽  
Author(s):  
Othar Kordsachia ◽  
Maximilian Focke ◽  
Patrick Velte
Keyword(s):  
Institutional Investors ◽  
Environmental Performance ◽  
Institutional Ownership ◽  
Institutional Investor ◽  
Research Area ◽  
Business Practices ◽  
Responsible Investment ◽  
Green Business ◽  
The Relationship

AbstractIn light of current climate change discussions, this paper analyzes the effect of ownership structure on a firm’s environmental performance with a subsequent focus on corporate emission reduction. Based on a cross-national European sample consisting of 7384 firm-year observations between 2008 and 2017, this study explores the relationship between sustainable institutional investors and environmental performance. In line with prior research and embedded in an agency theoretical framework, the nature of institutional investors may act as a stimulating driver towards green business practices. Sustainable institutional investors are defined based on their signatory status to the UN Principles for Responsible Investment and their (long-term) investment horizons. The first classification stems from a content-driven sustainability perspective, while the second is derived from temporal sustainability. The results indicate that sustainable institutional ownership is positively associated with a firm’s environmental performance. Further investigations reveal that sustainable institutional investor ownership is also positively associated with firms’ willingness to respond to the Carbon Disclosure Project. These results indicate a higher carbon-risk awareness in firms with greater sustainable institutional investor ownership. Our paper significantly contributes to prior empirical research on institutional ownership and environmental performance and offers useful theoretical and practical implications. It focusses on a still-underdeveloped research area, namely organizations and their relationships with the natural environment, including institutional equity ownership as a driver towards greener practices on a corporate level.

scholarly journals Institutional Investors' Monitoring Roles in State Controlled Firms and Income Smoothing Analysis for Stable Growth and Sustainability: Focusing on China Stock Market

2021 ◽  
Author(s):  
Meng-Jun Xu ◽  
Dong-Il Kim
Keyword(s):  
Sustainable Development ◽  
Private Information ◽  
Institutional Investors ◽  
Corporate Sustainability ◽  
Income Smoothing ◽  
Individual Investors ◽  
Stable Growth ◽  
Using Data ◽  
The Relationship

The purpose of this study is to examine the relationship between the institutional investors which can affect financial performance for corporate sustainability on the income smoothing. Therefore, this study focus on the connection between the nature of stock rights and income smoothing in China. For this study, hypotheses were established on the relationship each state-controlled companies, income smoothing, and information equilibrium of individual investors, and empirical analysis was conducted through related variables. The analysis results are summarized in three categories as follows. First, this research finds that state-controlled firms (CONTs) prefer income smoothing activities compared to non-state-controlled firms for the long-term sustainable development of firms using data from 2011 to 2019. Second, this study found out that Institutional investors support the behavior of CONTs to smooth their earnings because this behavior is seen as an attempt by CONTs to convey valuable private information to other investors. Third, we was able to discover that institutional investors' monitoring effect is predominantly driven by pressure-resistant institutional investors. This research complements the lack of empirical research on income smoothing and enable to give a guideline that the type of stock rights is a critical key determinant of participation in income smoothing activities for stable growth and sustainability in the future.

scholarly journals CEO power and R&D investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christine Naaman ◽  
Li Sun
Keyword(s):  
Chief Executive ◽  
Ordinary Least Squares ◽  
Financial Accounting ◽  
Least Squares Regression ◽  
Ceo Power ◽  
Firm Level ◽  
Content Type ◽  
Negative Relation ◽  
The Impact ◽  
D Investment

Purpose This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

Long horizon institutional investors and the relation between missing quarterly analyst forecasts and CEO turnover

2019 ◽  
Vol 27 (2) ◽  
pp. 190-223
Author(s):  
Juan Wang
Keyword(s):  
Institutional Investors ◽  
Institutional Ownership ◽  
Ceo Turnover ◽  
Career Concerns ◽  
Analyst Forecast ◽  
Positive Relation ◽  
Short Term ◽  
Content Type ◽  
Short Termism

Purpose The purpose of this paper is to investigate the effect of long horizon institutional ownership on CEO career concerns to meet the short-term earnings benchmark. Design/methodology/approach Using a sample of 10,565 firm-year observations in the USA, the paper examines the extent to which long horizon institutional investors mitigate the positive relation between CEO turnover and missing the quarterly consensus analyst forecast. Findings After controlling for the general performance-turnover relation, this paper finds that long horizon institutional investors mitigate the positive relation between CEO turnover and missing the quarterly consensus analyst forecast. This finding is stronger when CEOs focus on long-term value creation and do not sacrifice long-term value to boost current earnings and is stronger when the monitoring intensity by long horizon institutional investors is greater. Research limitations/implications The results suggest that long horizon institutional investors serve a monitoring role in alleviating CEO career concerns to meet the short-term earnings benchmark. Originality/value This paper contributes to the literature on the relation between long horizon institutional ownership and attenuated managerial short-termism. The literature is silent about why long horizon institutional investors alleviate managerial short-termism. This paper fills this void in the literature by documenting that long horizon institutional investors mitigate CEO career concerns for managerial short-termism. Moreover, this paper contributes to the literature on the monitoring role of institutional investors by documenting the incremental effect of institutional ownership on CEO career concerns to meet the short-term earnings benchmark.

scholarly journals A New Strategy to Quantitatively Identify Hot-Spot Areas in Growth of New HIV Infections for Targeted Interventions

2021 ◽  
Vol 9 ◽  
Author(s):  
Qiyu Zhu ◽  
Chunnong JiKe ◽  
Chengdong Xu ◽  
Shu Liang ◽  
Gang Yu ◽  
...  
Keyword(s):  
Physical Examination ◽  
Hiv Infection ◽  
Least Squares ◽  
Hot Spot ◽  
Hiv Infections ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Targeted Interventions ◽  
Quantitative Analyses

Background: Previous geographic studies of HIV infection have usually used prevalence data, which cannot indicate the hot-spot areas of current transmission. To develop quantitative analytic measures for accurately identifying hot-spot areas in growth of new HIV infection, we investigated the geographic distribution features of recent HIV infection and long-term HIV infection using data from a whole-population physical examination in four key counties in Liangshan prefecture, which are most severely affected by HIV in China.Methods: Through a whole-population physical examination during November 2017- June 2018 in the four key counties, a total of 5,555 HIV cases were diagnosed and 246 cases were classified as recently infected by laboratory HIV recency tests. The geospatial patterns of recent and long-term HIV infected cases were compared using ordinary least squares regression and Geodetector. Further, geospatial-heterogeneity was quantified and indicated using a residual map to visualize hot-spot areas where new infection is increasing.Results: The geographic location of HIV cases showed an uneven distribution along major roads and clustered at road intersections. The geographic mapping showed that several areas were clustered with more recently infected HIV cases than long-term infected cases. The quantitative analyses showed that the geospatial asymmetry between recent and long-term HIV infection was 0.30 and 0.31 in ordinary least squares regression and Geodetector analysis, respectively. The quantitative analyses found twenty-three townships showing an increase in the number of recent infections.Conclusions: Quantitative analysis of geospatial-heterogeneous areas by comparing between recent and long-term HIV infections allows accurate identification of hot-spot areas where new infections are expanding, which can be used as a potent methodological tool to guide targeted interventions and curb the spread of the epidemic.

scholarly journals Commercial Banks Performance in Ghana: Does Capital Structure Matter?

2017 ◽  
Vol 7 (1) ◽  
pp. 333 ◽  
Author(s):  
Ibrahim Nandom Yakubu ◽  
Mohammed Mubarik Alhassan ◽  
Abdul Azeez Mikhail ◽  
Abdul-Nasiru Iddrisu Alhassan
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Short Term ◽  
Return On Equity ◽  
Total Debt ◽  
Total Capital ◽  
The Relationship

This study seeks to investigate the relationship between capital structure and commercial banks performance in Ghana. Using a panel data of listed commercial banks spanning from 2010-2015, the Ordinary Least Squares regression model is employed to estimate the functions relating to bank performance (measured by Return on Equity) with measures of capital structure. The findings show statistically significant relationship between commercial banks’ performance and all the capital structure measures (the ratios of short-term debt to total capital, long-term debt to total capital, and total debt to total capital). Whereas total debt and banks’ performance are positively correlated, short-term debt and long-term debt are inversely related to banks’ performance. In essence, using large proportion of debt significantly enhance commercial banks performance in Ghana.

In hotel REITs, are institutional investors beneficial for firm value?

2020 ◽  
pp. 135481662090870
Author(s):  
Soyon Paek ◽  
Jin-Young Kim ◽  
Sung Gyun Mun ◽  
Chulhee Jun
Keyword(s):  
Least Squares ◽  
Random Effects ◽  
Institutional Investors ◽  
Firm Value ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Ordinary Least Squares ◽  
Random Effects Models ◽  
Fixed And Random Effects ◽  
Quadratic Models

Motivated by growing attention to the agency problems of institutional investors, along with recent changes that have identified real estate investment trusts (REITs) as a separate industry segment, this study investigates the impacts of institutional ownership on the firm value of hotel REITs. Hotel REITs provide unique regulatory and operational settings in which it is appropriate to investigate the potential adverse consequences of institutional investments on firm value. This study performs additional analyses using non-REIT hotel corporations (hotel C-corporations) for comparison. After testing pooled ordinary least squares, fixed and random effects, and two-stage least squares in quadratic models, the results of the random effects models are found to be valid and are thus adopted to examine the hypothesized relationship. The analysis showed a U-shaped relationship between institutional ownership and firm value (as measured using Tobin’s q) but a dominantly negative relationship in the majority of observations, whereas no significant relationship is found for hotel C-corporations.

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