A Study on the Role of Institutional Investors in the Process of Corporate Innovation Activities

다국어 초록 (Multilingual Abstract)

This study examines whether institutional investors have a significant influence on the process of corporate innovation activities. The process of corporate innovation activities can be classified into research and development activities. Research activities are related to uncertain future earnings rather than development activities and expenditures for research activities are made from a long－term perspectives. Research and development expenditures were respectively used as proxies for the process of corporate innovation activities. The type of institutional investors were classified into foreign and domestic institutional investors.
This study used a sample of public companies listed on the Korean Stock Exchange from 2001 to 2014. This study’s main result indicates that foreign institutional investors have a significant positive impact on research expenditures but not on development expenditures. Domestic institutional investors were found to have no significant impact on either research or development expenditures. Foreign institutional investors significantly impact research expenditures in the two－stage instrumental variable approach to address endogeneity factors in foreign institutional ownership. These results suggest that corporate innovation activities may vary depending on the type of institutional investors and that foreign institutional investors take a long－term perspective and increase the corporate innovation activities such as research activities. Empirical findings of this study will provide practical implications for policies that regulate institutional investors who may not monitor managers to under－invest corporate innovation activities and encourage corporate innovation activities.

참고문헌 (Reference)

1 전영순, "외국인투자자 및 국내 기관투자가의 투자의사결정과 회계이익의 질(Quality)" 한국경영학회 32 (32): 1001-1032, 2003

2 곽태완, "기업특성에 따른 연구개발비의 가치관련성에 관한 연구" 한국국제회계학회 (50) : 159-182, 2013

3 오상희, "기업의 전략에 따른 연구개발비가 기업 성과에 미치는 영향" 한국회계학회 21 (21): 285-306, 2012

4 고봉찬, "국내 주식시장 개방의 효과와 외국인 투자자의 영향에 관한 고찰" 한국경영학회 46 (46): 875-902, 2017

5 Choi, J. J., "The value of outside directors：Evidence from corporate governance reform in Korea" 42 (42): 941-962, 2007

6 Hall, B., "The paradox revisited：An empirical study of patenting in the U.S. semiconductor industry, 1979-1995" 32 (32): 101-128, 2001

7 Grinblatt, M., "The investment behavior and performance of various investor types：A study of finland’s unique data set" 55 (55): 43-67, 2000

8 Ballester, M., "The economic value of the R&D intangible asset" 12 (12): 605-633, 2003

9 Graham, J. R., "The economic implications of corporate financing reporting" 40 (40): 3-73, 2005

10 Baysinger, B., "The composition of boards of directors and strategic control：Effects on corporate strategy" 15 (15): 72-87, 1990

11 Ferreira, M. A., "The colors of investors’ money：The role of institutional investors around the world" 88 (88): 499-533, 2008

12 Grossman, S., "Takeover bids, the free－rider problem, and the theory of the corporation" 11 : 42-64, 1980

13 Ferreira, M. A., "Shareholders at the gate? Institutional investors and cross－border mergers and acquisitions" 23 (23): 601-644, 2010

14 Gasper, J., "Shareholder investment horizons and the market for corporate control" 76 (76): 135-165, 2005

15 Fama, E., "Separation of ownership and control" 26 (26): 301-325, 1983

16 Shin, I. H., "Role of foreign and domestic institutional investors in corporate sustainability：Focusing on R&D investment" 12 (12): 1-13, 2020

17 Lerner, J., "Private equity and long－run investment：The case of innovation" 66 (66): 445-477, 2011

18 Lee, P. M., "Ownership structures and R&D investments of U.S. and Japanese firms：Agency and stewardship perspectives" 46 (46): 212-225, 2003

19 Hoskisson, R. E., "Managerial incentives and investment in R&D in large multiproduct firms" 4 (4): 325-341, 1993

20 Shleifer, A., "Large shareholders and corporate control" 94 (94): 461-488, 1986

21 Lev, B., "Intangibles：Management, Measurement, and Reporting" Brookongs Institution Press 2000

22 Yan, X., "Institutional investors and equity returns：Are short－term institutions better informed?" 22 (22): 893-924, 2009

23 Aghion, Philipper, J. V, "Innovation and institutional ownership" 103 (103): 277-304, 2013

24 Cremers, M., "Indexing and active fund management：International evidence" 120 (120): 539-560, 2016

25 International Accounting Standards Board, "IAS 38 Intangible Assets"

26 Connolly, R. A., "Firm size and the effect of R&D on Tobin’s Q" 35 (35): 217-223, 2005

27 McConnell, J. J., "Equity ownership and the two faces of debt" 39 (39): 131-157, 1995

28 Baysinger, B., "Effects of board and ownership structure on corporate R&D strategy" 34 (34): 205-214, 1991

29 Lach, S., "Dynamics of R&D and investment in the scientific sector" 97 (97): 880-904, 1989

30 Aggarwal, R., "Does governance travel around the world? Evidence from institutional investors" 100 (100): 154-181, 2011

31 Kim, H, D., "Do long－term institutional investors foster corporate innovation" 59 (59): 1163-1195, 2019

32 Karolyi, G. A., "Did the asian financial crisis scare foreign investors out of Japan?" 10 (10): 411-442, 2002

33 Gillan, L., "Corporate governance proposals and shareholder activism：The role of institutional investors" 57 (57): 275-305, 2000

34 Myers, S., "Corporate financing and investment decisions when firms have information that investors do not have" 13 (13): 187-221, 1984

35 Hoskisson, R. E., "Conflicting voices：The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies" 45 (45): 697-716, 2002

36 Financial Supervisory Service, "Best Practice for Development Expenditures Disclosure"

37 Yoo, T., "Agency theory and the context for R&D investment：Evidence from Korea" 12 (12): 227-252, 2013

38 Almazan, A., "Active institutional shareholders and costs of monitoring：Evidence from executive compensation" 34 (34): 5-34, 2005

39 Cohen, W. M., "Absorptive capacity：A new perspective on learning and innovation" 128-152, 1990