Monitoring Institutional Ownership and Corporate Innovation
Journal of Empirical Finance
Original Item ID
We document a positive effect of monitoring institutional ownership on firm innovation after controlling for traditional measures of institutional ownership. We further find that monitoring institutions enhance firm innovation by: (1) incentivizing CEO risk-taking and reducing intense board monitoring, (2) alleviating agency problems, (3) attenuating managerial career concerns, and (4) mitigating corporate misvaluation. Overall, our findings highlight the importance of considering institutions’ monitoring incentives when examining the outcomes of their portfolio firms’ activities associated with high information asymmetry.
Miller, Steve; Qiu, Bin; Wang, Bin; and Yang, Tina, "Monitoring Institutional Ownership and Corporate Innovation" (2022). Finance Faculty Research and Publications. 154.
Journal of Empirical Finance, Vol. 69 (December 2022): 144-165. DOI.