A Study On The Influence Of Monitoring Institutional Investors On Company's R&D

Technological innovation is the company's core competitiveness and has an important influence on the company's survival and long-term development.Technological innovation can provide a stable driving force and guarantee for China's economic growth.With the gradual increase in the status of institutional investors in the capital market,institutional shareholders use their own advantages to start actively participating in corporate governance and supervise corporate governance decisions.They turned from negative indirect governance to positive direct governance.Institutional investors can rationally judge the impact of R&D activities on the long-term value of the company.They will pay attention to the operating performance and long-term development of listed companies,participate in the governance of these companies,and encourage the company's managers to increase R&D investment.Therefore,this paper studies the effect of monitoring institutional investors' participation in corporate governance on R&D activities.This article first systematically reviews related literature at home and abroad.Secondly,the theoretical basis of institutional investors' influence on the company's R&D is introduced: principal-agent theory and shareholder activism theory.Based on this,six hypotheses are proposed: Hypothesis 1 is that monitoring institutional investors have a significant positive effect on the company's R&D;Hypothesis 2 is that the monitoring role of monitoring institutional investors will weaken the risk that the CEO will be fired when the company's short-term performance declines;Hypothesis 3 is that when the company's valuation is higher,the positive effect of monitoring institutional investors on company's R&D will be stronger;Hypothesis 4 is that when the stock liquidity of the company is higher,the positive effect of monitoring institutional investors on company's R&D will be weaker;Hypothesis 5 is that when the company's largest shareholder holds a higher proportion of shares,the positive effect of monitoring institutional investors on company's R&D will be weaker;Hypothesis 6 is that when the product market competition intensity of the company's industry is higher,the positive effect of the monitoring institutional investor on company's R&D will be stronger.Then,in order to verify the hypothesis,this paper selects the Shanghai-Shenzhen A shares manufacturing listed company from 2008 to 2015 as a sample,and builds a multiple regression model.Then use instrumental variables and the Heckman two-step method to eliminate endogenous problems.The research results show that: monitoring institutional investors have a significant positive effect on the company's R&D;institutional investors' monitoring role will weaken the risk that the CEO will be fired when the company's short-term performance declines;when the company's valuation is higher,the positive effect of monitoring institutional investors on company's R&D will be stronger;when the stock liquidity of the company is higher,the positive effect of monitoring institutional investors on company's R&D will be weaker;when the company's largest shareholder holds a higher proportion of shares,the positive effect of monitoring institutional investors on company's R&D will be weaker;when the product market competition intensity of the company's industry is higher,the positive effect of the monitoring institutional investor on company's R&D will be stronger.