What types of bondholders impede corporate innovative activities?

Arbeitspapier

This study investigates whether institutional bond blockholders (i.e., bond funds that hold more than 5% of a firm's outstanding bonds) impede firm innovative activities, and if they do, through which channels. We find that long-term bond blockholders do not discourage firms from conducting innovative activities. Short-term bond blockholders, however, significantly reduce both firm investments in R&D and the innovative quality of these investments. Furthermore, their negative impact is stronger than the negative impact of short-term stockholders. Our results cannot be fully explained by short-term bondholders' a priori investment preferences and are robust to possible endogeneity concerns. Overall, they suggest that the option of the 'Wall Street walk' allows bondholders to exert considerable influence on firms' risk-taking decisions.

Object Details

• ISBN: 978-952-6699-42-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Finland Research Discussion Papers ; No. 23/2013

Classification and Topics

• Classification: Wirtschaft ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
• Subject: Bondholder ; Innovation ; Investment Horizon ; Wall Street Walk

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hasan, Iftekhar ; O Brien, Jonathan ; Ye, Pengfei
• Event: Veröffentlichung
• (who): Bank of Finland
• (where): Helsinki
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/212263
• Last update: 10.03.2025, 11:46 AM CET