Abstract
In corporate innovation, the type of institutional ownership matters. Using exogenous shocks from mergers of financial institutions, we identify two countervailing effects of common ownership on corporate innovation. Higher common ownership by focused, long-term dedicated institutional investors promotes innovation output and impact, as measured by number of patents and non-self citations. Meanwhile, higher common ownership by diversified, short-term transient investors discourages these. Moreover, the effects of common ownership by diversified, long-term quasi-indexing institutions on innovation vary with industry competitiveness. Evidence suggests that common ownership affects innovation through the channels of firm valuation and financing constraint. These results contribute to an ongoing debate on the effects of common institutional ownership on competition.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
