Do Foreign Institutional Investors Enhance Firm Innovation?

Luong, Hoang Minh; Moshirian, Fariborz; Nguyen, Lily; Tian, Xuan; Zhang, Bohui

doi:10.2139/ssrn.2409909

“…Additionally, we 43 find that the positive effect of QFII ownership exists but relies on the presence of mutual funds. Consistent with Bena et al (2015) and Luong et al (2014), it suggests that it is beneficial to encourage QFIIs' entry to Chinese stock market. Meanwhile, to magnify their positive effect on innovation, more work should be done to induce QFIIs in China, whose shareholdings only account for a tiny proportion at the current stage, to invest in those firms with the presence of mutual funds.…”

Section: Discussion and Policy Implicationsmentioning

confidence: 65%

The Effect of Institutional Ownership on Firm Innovation: Evidence from Chinese Listed Firms

Rong

¹

,

Wu

²

,

Boeing

³

2017

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. and 2011, we find that the presence of institutional investors enhances firm innovation.Consistent with the monitoring view, we further find that (1) the effect of institutional investors on firm patenting mainly comes from mutual funds; (2) the effect is more pronounced when market competition is more intense; (3) the effect exists among private-and minor state-owned enterprises, but not among major state-owned enterprises.The above findings are robust when innovation quality is examined.

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“…With 18 rich experiences and financial prudence, these foreign institutions are supposed to enhance corporate governance in China, which has lagged behind the international standard. Moreover, cross-country studies have documented that foreign institutional investors enhance firm innovation (e.g., Bena et al, 2015;Luong et al, 2014).…”

Section: Gross Effectmentioning

confidence: 99%

The effect of institutional ownership on firm innovation: Evidence from Chinese listed firms

Rong

¹

,

Wu

²

,

Boeing

³

2017

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. and 2011, we find that the presence of institutional investors enhances firm innovation.Consistent with the monitoring view, we further find that (1) the effect of institutional investors on firm patenting mainly comes from mutual funds; (2) the effect is more pronounced when market competition is more intense; (3) the effect exists among private-and minor state-owned enterprises, but not among major state-owned enterprises.The above findings are robust when innovation quality is examined.

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“…A number of influential research studies have found that investors with higher human capital play a crucial role in facilitating the technology adoption (Nelson and Phelps 1966;Romer 1990;Benhabib and Spiegel 1994;Luong et al 2014;Bena et al 2016). However, different sectors may utilize these two growth ingredients to a different degree.…”

Section: Manufacturing Can Better Utilize Human Capital and Economic mentioning

confidence: 99%

Manufacturing as the Key Engine of Economic Growth for Middle-Income Economies

Su

¹

,

Yao

²

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Working papers are subject to formal revision and correction before they are finalized and considered published.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org AbstractThis paper revisits the role of the manufacturing sector during the middle-income stage. By exploiting a large dataset that covers internationally comparable sectoral information, we prove that the manufacturing sector is imbued with three important characteristics. First, for middle-income economies, manufacturing pulls along services, instead of the other way around. A decline in the manufacturing sector growth rate will negatively affect the growth rate of the services sector, in both the short-run and long-run meanings. Second, we show that manufacturing development not only promotes the incentives of savings, but also accelerates the pace of technological accumulation. Third, an increased share of the manufacturing sector in middle-income economies can enhance the utilization of human capital and economic institutions. Our empirical findings indicate that the manufacturing sector is still the key engine of economic growth for middle-income economies.

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Do Foreign Institutional Investors Enhance Firm Innovation?

Cited by 12 publications

References 17 publications

The Effect of Institutional Ownership on Firm Innovation: Evidence from Chinese Listed Firms

The Effect of Institutional Ownership on Firm Innovation: Evidence from Chinese Listed Firms

The effect of institutional ownership on firm innovation: Evidence from Chinese listed firms

Manufacturing as the Key Engine of Economic Growth for Middle-Income Economies

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