Parthiban David

Institutional investors and firm innovation : a test of competing hypotheses

There is much debate about the effect of institutional investors on firm innovation. This paper tests three competing hypotheses by including differences among institutions in their ability to influence firms. Results using an outcome-based measure of innovation indicate that institutions do not foster short-term orientation; instead they may influence firms to increase innovation.

The Effect of Institutional Investors on the Level and Mix of Ceo Compensation

This study investigated the influence of institutional investors on CEO compensation policy. Results suggest that institutional owners that have only an investment relationship with a firm influenc...

The Influence of Activism by Institutional Investors on R&D

Researchers have assumed that large ownership stakes held by institutional investors grant them power to influence R&D investments. We found that ownership alone was insufficient and that institutions resorted to activism to influence R&D investments. Institutional activism increased R&D inputs over both the short and long terms. The nature of the activism and the strategic context of the R&D investment moderated the relationship. Further, R&D inputs mediated the effect of activism on R&D outputs.

Research Note---The Impact of Information Technology Investments and Diversification Strategies on Firm Performance

As companies continue to make large investments in information technology (IT), questions about how and in what contexts such investments pay off have gained importance. We develop a theoretical framework to explain how IT investments could pay off in the economically significant context of corporate diversification, and empirically find that the performance pay off to IT investments is greater for firms with greater levels of diversification. We also find that the performance payoff to IT investments is greater in related diversification than in unrelated diversification.

Do Shareholders or Stakeholders Appropriate the Rents from Corporate Diversification? The Influence of Ownership Structure

Prior work on the performance consequences of corporate diversification has treated all powerful owners as seeking the same benefits from diversification (i.e, higher profit rather than growth) and therefore limiting value appropriation by other stakeholders such as employees and managers. In contrast, we distinguish between domestic “relational” owners and foreign “transactional” owners in Japanese corporations. Although transactional owners do indeed prioritize profitability when diversifying, relational owners primarily seek growth rather than profits from diversification. Furthermore, relational owners also allow managers and employees to appropriate more of the rents arising from diversification than do transactional owners.

The Implications of Debt Heterogeneity for R&D Investment and Firm Performance

An assumption in prior research is that debt is homogeneous and provides inappropriate governance for R&D investments. We argue that debt is heterogeneous: although transactional debt does indeed impose strict contractual constraints that provide inappropriate governance for R&D investments, relational debt has very different characteristics that provide more appropriate governance. Using a sample of Japanese firms, we find that firms that align their debt structures with their R&D investments perform better than those that are misaligned. Furthermore, firms tend to align their debt structure with R&D investments, but only after deregulation permits relatively free access to various types of debt.

The Impact of Ownership Structure on Wage Intensity in Japanese Corporations

The authors studied the effect of ownership structure on human capital investments as indicated by wage intensity, defined as the ratio of expenditure on employee wages to sales, in a sample of 996 Japanese manufacturing firms during their economic recession of 1998-2002. They found that domestic shareholders, with interests beyond financial considerations, enhance wage intensity, especially when performance is low, and thereby safeguard human capital investments. Foreign shareholders with sole interest in financial returns have an opposite effect; they reduce wage intensity when firm performance is low.

An examination of the impact of executive compensation disparity on corporate social performance

We investigate the relationship between top management team compensation disparity and corporate social performance. We argue that pay structures with high disparity are reflective of transactional, individualistic organizations that foster a shareholder orientation. In contrast, pay structures with low disparity are indicative of relational, cooperative organizations that foster a stakeholder orientation. Examining the effect of these attributes on corporate social performance, we find that corporate social performance is higher in low pay disparity firms than in high pay disparity firms. We discuss our contributions to executive compensation and corporate social performance research and suggest directions for future research.

STAKEHOLDER INFLUENCES ON DIVERSIFICATION: IMPLICATIONS FOR SHAREHOLDERS AND STAKEHOLDERS.

The article presents the results of research into the relative influence of stakeholders and shareholders on corporate strategic planning in terms of diversification and performance, focusing on co...

REVISITING THE AGENCY THEORETIC VIEW OF CAPITAL STRUCTURE.

The article discusses the role of debt as a constraint on corporate growth, noting that inappropriate investments are usefully restrained by debt, and distinguishing between the effects of debt in the form of public securities as opposed to embedded debt in the form of loans. A study of more than 1800 Japanese companies in the 1993 to 2001 period is discussed. The results indicate that public debt is better for restraining undesirable corporate growth. Sociological factors which account for this difference are analyzed.