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How do common institutional investors adapt to early technology adoption?

Author

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  • Zhang, Linghao
  • Jin, Xinwei
  • Wu, Kai

Abstract

We examine how common institutional investors (CIIs) adapt to firms’ early adoption of intelligent manufacturing (IM) technologies in China. Employing a staggered difference-in-differences (DID) approach based on China’s IM Pilot projects, we find that CIIs significantly increase their ownership of firms after they adopt IM, suggesting strategic portfolio adjustments. This effect is stronger in industries with higher concentration and firms facing greater information asymmetry. We identify profitability and innovation as key channels through which early technology adoption influences CIIs’ investment decisions. Additionally, we demonstrate spillover effects from pilot to non-pilot firms through CIIs. Furthermore, the increase in common institutional ownership (CIO) resulting from early technology adoption reduces the stock price crash risk, demonstrating governance benefits. Our findings contribute to the understanding of CIO determinants and investor behavior in response to technological change, offering insights for policymakers on the intersection of technological advancement, ownership structures, and market competition.

Suggested Citation

  • Zhang, Linghao & Jin, Xinwei & Wu, Kai, 2025. "How do common institutional investors adapt to early technology adoption?," Journal of Business Research, Elsevier, vol. 199(C).
    • Handle: RePEc:eee:jbrese:v:199:y:2025:i:c:s0148296325003376
    DOI: 10.1016/j.jbusres.2025.115514
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    More about this item

    Keywords

    Early technology adoption; Institutional investors; Common ownership; Intelligent manufacturing; Corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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