Research
Working Papers
Common Ownership and the Market for Technology (Job Market Paper)
New version coming soon.
Does Institutional Ownership Composition Matter for Corporate Innovation? - with Bing Guo, David Pérez-Castrillo, and Anna Todrà-Simats
Institutional investors vary greatly in their involvement in firm decisions. Whereas some institutional investors have incentives to actively monitor and influence firms in a firm-specific manner, others greatly rely on standard measures or the uniform recommendations of proxy advisors like the ISS. We study the heterogeneous effects of different institutional owners on firms' innovation strategy and outcomes. We find that institutional investors with monitoring incentives lead firms to acquire innovation from external sources, whereas blockholder (i.e. non-motivated) investors induce firms to invest in innovation mostly by developing their internal R&D. Both motivated owners and blockholders have a positive effect on patent and citation outcomes, but the effect of motivated investors is 2.5 times larger than that of blockholders. The mechanisms behind these effects are different. Whereas motivated investors encourage innovation because they reduce managerial career concerns, blockholders do so by improving firms' corporate governance. These results shed light on the importance of active monitor funds to help firms achieve value-maximizing outcomes.