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The Impact of Changing Stock Ownership Patterns in the United States : Theoretical Implications and Some Evidence

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  • Sumit K. Majumdar
  • Anuradha Nagarajan

Abstract

[eng] Large-scale change in the ownership structures of U.S. corporations, resulting in the large increase in the presence of institutional investors as corporate share-holders, is asserted to induce corporate managers to take a short-term focus and cut spending on discretionary research and development and capital expenditures. We develop a theoretical view that capital market constituents do take a long-term view of corporate actions, and the presence of a greater proportion of institutional investors as owners will be positively associated with instances of long-term behavior by firms. We evaluate the argument for a sample of 112 randomly-selected U.S. corporations for the decade of the 1980s. Our results provide support for our reasoning, and we find no evidence for the alternative explanation positing that the presence of institutional investors induces short-termism in the behavior of U.S. corporations. [fre] Des changements importants dans les structures de propriété des entreprises américaines, se traduisant par la présence des investisseurs institutionnels, inciteraient les gestionnaires à mettre l'accent sur le court terme et réduiraient les dépenses en R&D et les investissements. Nous développons l'idée selon laquelle les acteurs financiers ont une vue à long terme des actions des entreprises, et la présence d'une plus forte proportion d'investisseurs institutionnels est associée positivement à des comportements à long terme. Nous étudions ceci à partir d'un échantillon au hasard de 112 entreprises américaines au cours des années 1980. Nos résultats vont dans le sens de notre argumentation, et nous ne trouvons aucune indication d'une explication alternative selon laquelle la présence d'investisseurs institutionnels inciterait des comportements court-termistes.

Suggested Citation

  • Sumit K. Majumdar & Anuradha Nagarajan, 1997. "The Impact of Changing Stock Ownership Patterns in the United States : Theoretical Implications and Some Evidence," Revue d'Économie Industrielle, Programme National Persée, vol. 82(1), pages 39-54.
  • Handle: RePEc:prs:recind:rei_0154-3229_1997_num_82_1_1686
    Note: DOI:10.3406/rei.1997.1686
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    Cited by:

    1. Kamran & Attaullah Shah, 2014. "The Impact of Corporate Governance and Ownership Structure on Earnings Management Practices: Evidence from Listed Companies in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(2), pages 27-70, July-Dec.
    2. Bronwyn Hall, 2004. "The financing of research and development," Chapters,in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar Publishing.
    3. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, Elsevier.
    4. repec:eee:jbrese:v:90:y:2018:i:c:p:151-163 is not listed on IDEAS

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