Do Institutional Investors Exacerbate Managerial Myopia?

35 Pages Posted: 26 Jan 1998

See all articles by John J. McConnell

John J. McConnell

Purdue University

Sunil Wahal

Arizona State University (ASU) - Finance Department

Date Written: October 1997

Abstract

This study analyzes corporate expenditures for property, plant and equipment (PP&E) and research and development (R&D) for over 2,500 firms from 1987 to 1994. We document a positive relation between expenditures for PP&E and R&D and institutional share ownership. This relation is robust to a variety of specifications. We examine the link between firm-level expenditures and institutional ownership by using lead-lag structures and changes in institutional ownership. The data do not support the contention that institutional investors cause corporate managers to behave myopically. Indeed, the data indicate that the presence of institutional shareholders allows managers to invest more in PP&E and R&D than would individual shareholders.

JEL Classification: G31. G32. G38

Suggested Citation

McConnell, John J. and Wahal, Sunil, Do Institutional Investors Exacerbate Managerial Myopia? (October 1997). Available at SSRN: https://ssrn.com/abstract=47271 or http://dx.doi.org/10.2139/ssrn.47271

John J. McConnell

Purdue University ( email )

MGMT, KRAN
403 West State St.
West Lafayette, IN 47907-2056
United States
765-494-5910 (Phone)
765-494-7863 (Fax)

Sunil Wahal (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
849
rank
26,847
Abstract Views
3,324
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information