نوآوری های شرکت ها و دیدارهای شرکت های سرمایه گذار نهادی
Abstract
1- Introduction
2- Institutional background, literature review and hypothesis development
3- Sample, data, and methodology
4- Empirical results and discussion
5- Further analysis
6- Conclusions
References
Abstract
This study investigates whether and how institutional investors' site visits affect corporate innovation. Using all Chinese firms listed in the Shenzhen Stock Exchange from 2009 to 2013, we find that institutional investors' site visits significantly enhance corporate innovation and this effect is more pronounced for firms with a lower-quality information environment and poor corporate governance. We further find that the governance effect of site visits on innovation is consistent with career concerns rather than the quiet life hypothesis. We perform two stage-least square analysis to address possible endogeneity concerns and several robustness checks including using alternative measures of site visits and corporate innovation, alternative model specifications, and controlling for firm fixed effects. We also find that the effects of institutions' site visits are substitutes for the effects of institutional shareholding.
Introduction
Corporate innovation is an important contributor to a firm’s comparative advantage (Porter, 1992) as well as a key engine of a country’s economic growth (Solow, 1957). Therefore, investigating what influences corporate innovation is important in understanding a firm’s prospects. Institutional investors are playing increasingly important roles in financial markets (Chen et al., 2007; An and Zhang, 2013). Prior literature finds that institutional investors can promote corporate innovation by reducing agency costs or in other ways, since they have an information advantage (Bushee, 1998; Wahal and McConnell, 2000; Eng and Shackell, 2001; Aghion et al., 2013). However, the research investigates only the effect of institutional ownership and neglects the impact of institutional investors’ information acquisition process on corporate innovation. In this paper, we focus on one key type of information acquisition activity of institutional investors, that is, corporate site visits, one of the most prevalent and important types of information acquisition activities of institutional investors (Brown et al., 2015; Cheng et al., 2015, 2016). As argued by Holmstrom (1989), innovation is a long, idiosyncratic, and unpredictable process that involves a very high probability of failure. Due to information asymmetry, corporate innovation often faces serious financing constraints (Hsu et al., 2014; Cornaggia et al., 2015) and agency conflicts arising from managers’ career concerns and their preference for the quiet life always discourage corporate innovation (Aghion et al., 2013; Atanassov, 2013; Bernstein, 2015). Cheng et al., (2015, 2016) find that institutional investors’ corporate site visits can facilitate their information acquisition by observing firms’ operations and engaging in face-to-face discussions with managers and other employees, which can effectively reduce a firm’s information asymmetry.