Role of foreign and domestic institutional investors in corporate sustainability: Focusing on r&d investment
- Authors
- Shin, I.; Park, S.
- Issue Date
- Oct-2020
- Publisher
- MDPI AG
- Keywords
- Domestic institutions; Foreign institutions; Innovation; Institutional investors; R& D; Sustainability
- Citation
- Sustainability (Switzerland), v.12, no.20, pp.1 - 13
- Journal Title
- Sustainability (Switzerland)
- Volume
- 12
- Number
- 20
- Start Page
- 1
- End Page
- 13
- URI
- https://scholarworks.bwise.kr/gachon/handle/2020.sw.gachon/78939
- DOI
- 10.3390/su12208754
- ISSN
- 2071-1050
- Abstract
- This paper examines the effects of ownership by foreign and domestic institutional investors on corporate sustainability by focusing on the level of research and development (R&D) investment. Long-term investment in R&D is crucial for companies that seek to generate sustainable growth. Ordinary least-squares regression is performed on a sample of Korean listed companies. The main test with both foreign and domestic institutional ownership is based on a study period from 2001 to 2004. The results indicate that firms with higher levels of foreign institutional ownership exhibit greater levels of corporate R&D activities, while the ownership by domestic institutions has no significant influence on firms’ R&D investment. An additional test with foreign institutional ownership data is based on an extended study period from 2001 to 2014, and shows that foreign institutional ownership is positively related to firms’ R&D investment. This result survives the two-stage instrumental variable approach used to address endogeneity factors in foreign institutional ownership. Taken together, these findings suggest that foreign institutions can effectively monitor managerial myopia and promote corporate innovations. © 2020 by the authors. Licensee MDPI, Basel, Switzerland.
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