Title: Family ownership and R&D investment: the moderating role of institutional investors
Authors: Sami Gharbi; Hidaya Othmani
Addresses: VPNC Laboratory, Faculty of Law, Management and Economics of Jendouba, University of Jendouba, Campus Universitaire, Avenue du Maghreb Arabe, 8100 Jendouba, Tunisia ' VPNC Laboratory, Faculty of Law, Management and Economics of Jendouba, University of Jendouba, Campus Universitaire, Avenue du Maghreb Arabe, 8100 Jendouba, Tunisia
Abstract: In this paper, we investigate the relationship between family ownership and R&D investments for a sample of French firms. We also examine whether institutional ownership has a moderating role on this relationship. First, we test the impact of institutional ownership concentration. Then, we consider the heterogeneous character of institutional investors and we divide them according to whether they have business relations with investee firms (pressure sensitive institutions such as banks and insurance companies) or not (pressure insensitive institutions such as pension funds, mutual funds and hedge funds). Our results show a significant negative influence of family ownership on R&D investments. Furthermore, institutional blockholders and pressure insensitive institutional investors positively moderate the relationship between R&D investment and family ownership. We contribute to the literature on the impact of principal-principal agency problems on corporate investment decisions. Our results point out that institutional ownership can mitigate the agency problems between majority and minority shareholders in firms with family ownership.
Keywords: R&D investment; family ownership; institutional ownership; agency theory; socio-emotional wealth theory; institutional theory.
International Journal of Corporate Governance, 2021 Vol.12 No.2, pp.185 - 207
Received: 14 Sep 2020
Accepted: 01 Jul 2021
Published online: 30 Nov 2021 *