Year of Graduation
The Influence of the Institutional Investors on the Innovation Performance in the USA
Strategic Corporate Finance
Innovations are a major driver of the global economy. Recently, the typical major owner become an institutional investor. Moreover, the size of stakes of institutional owners have increased, which leads to the ownership concentration among types. Traditional investment managers, banks, insurance companies and hedge funds have different goals and strategies, so their roles in firms differ significantly. In this article, we analyze the influence of different types of investors on the innovation input and output of 3000 Russel index US companies. This research uses a GLS models to prove on 17346 firm-year observations for period 2004–11 that different types of investors have different effects on the innovative performance of US companies. By focusing on the ownership concentration, we demonstrate first, that grey investors decrease innovative output; second, that passive independent institutions enhance innovation input and output in virtue of their active monitoring and long-term investment horizons; third, that the concentration of the industry, size and financial constraints play an important role in the innovative performance.