Abstract

https://ssrn.com/abstract=2409909
 


 



How Do Foreign Institutional Investors Enhance Firm Innovation?


Luong Hoang Luong


University of New South Wales (UNSW) - School of Banking and Finance

Fariborz Moshirian


Institute of Global Finance, UNSW Business School

Lily H.G. Nguyen


La Trobe University - La Trobe Business School - Department of Finance; Financial Research Network (FIRN)

Xuan Tian


Tsinghua University - PBC School of Finance

Bohui Zhang


University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN)

October 11, 2016

Kelley School of Business Research Paper No. 2014-04

Abstract:     
We examine the effect of foreign institutional investors on firm innovation. Using firm-level data across 26 non-U.S. economies between 2000 and 2010, we show that foreign institutional ownership has a positive, causal effect on firm innovation. We further explore three possible underlying mechanisms through which foreign institutions affect firm innovation: foreign institutions act as active monitors, provide insurance for firm managers against innovation failures, and promote knowledge spillovers from high-innovation economies. Our paper sheds new light on the real effects of foreign institutions on firm innovation.

Number of Pages in PDF File: 64

Keywords: Foreign institutional investors; Firm innovation; Monitoring; Tolerance for failure; Knowledge spillovers

JEL Classification: G23; G32; G34


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Date posted: March 17, 2014 ; Last revised: October 13, 2016

Suggested Citation

Luong, Luong Hoang and Moshirian, Fariborz and Nguyen, Lily H.G. and Tian, Xuan and Zhang, Bohui, How Do Foreign Institutional Investors Enhance Firm Innovation? (October 11, 2016). Kelley School of Business Research Paper No. 2014-04. Available at SSRN: https://ssrn.com/abstract=2409909 or http://dx.doi.org/10.2139/ssrn.2409909

Contact Information

Luong Hoang Luong
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Sydney, NSW 2052
Australia
HOME PAGE: http://www.banking.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWn

Fariborz Moshirian
Institute of Global Finance, UNSW Business School ( email )
Sydney, NSW 2052
Australia
+61 2 93855859 (Phone)
+61 2 94877519 (Fax)

Lily H.G. Nguyen
La Trobe University - La Trobe Business School - Department of Finance ( email )
Melbourne, VIC, 3086
Australia

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Xuan Tian (Contact Author)
Tsinghua University - PBC School of Finance ( email )
No. 43, Chengfu Road
Haidian District
Beijing 100083
China
+86-10-62794103 (Phone)
HOME PAGE: http://xuantian.info/
Bohui Zhang
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Australian School of Business
Sydney NSW, 2052
Australia
61293855834 (Phone)
61293856347 (Fax)
HOME PAGE: http://www.banking.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWn

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

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