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We show that following shocks that change an industry’s competitive environment, firms with more shortterm institutional investors experience smaller drops in sales and investment and have better long-term performance than similar firms affected by the shocks.
To do so, these firms introduce new products, file trademarks, intensify their innovation efforts, conduct more diversifying acquisitions, and have higher executive turnover in the aftermath of the shocks. Our findings suggest that firms with more short-term investors adapt better to the new competitive environment. Endogeneity of institutional ownership and other selection problems do not appear to drive our findings.
In this paper, we investigate whether reform of EU company law is needed to make corporate governance more sustainable through an analysis of some of the...
A growing number of studies suggest that common ownership caused cooperation among firms to increase and competition to decrease. We take a closer look...