Do institutional investors exacerbate managerial myopia?

Sunil Wahal, John J. McConnell

Research output: Contribution to journalArticlepeer-review

163 Scopus citations


This study analyzes corporate expenditures for property, plant and equipment (PP&E), and research and development (R&D) for over 2500 US firms from 1988 to 1994. We find no support for the contention that institutional investors cause corporate managers to behave myopically. Indeed, we document a positive relation between industry-adjusted expenditures for PP&E and R&D and the fraction of shares owned by institutional investors. This relation is robust to a variety of empirical tests, including those that account for endogeneity between institutional ownership and firm-level discretionary expenditures.

Original languageEnglish (US)
Pages (from-to)307-329
Number of pages23
JournalJournal of Corporate Finance
Issue number3
StatePublished - Sep 1 2000
Externally publishedYes


  • Endogeneity
  • Institutional investors
  • Managerial myopia

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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