How Do Foreign Institutional Investors Enhance Firm Innovation?
By Hoang M. Luong, Fariborz Moshirian, Lily H. G. Nguyen, X. Tian, Bohui Zhang. Journal of Financial and Quantitative Analysis, 2017
396 citations recorded by the source corpus.
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 article sheds new light on the real effects of foreign institutions on firm innovation.
Subfields: Accounting, Information Systems, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/04d58a989a1a985e3af6998c17bf8c03e11360ec
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Citations in the corpus
- The Linear and Non-Linear Effects of Internal Control and Its Five Components on Corporate Innovation: Evidence from Chinese Firms Using the COSO Framework (2020, background): “Luong et al. (2017) document that firms with foreign institutional investors have more innovation because foreign institutional investors are better at monitoring, protecting executives from innovation failures, and enhancing knowledge spillovers than other investors.”
- Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China (2020, background): “Prior studies show that the foreign parties investing in emerging markets can potentially enhance the information environment in associationwith an increase in analyst coverage and a decline in earnings management, resulting in enhanced firm innovation (Lel, 2019; Luong et al., 2017).”