Professor Bingxuan Lin, the Foreign Core Scholar of the base, has published a collaborative paper titled "Foreign institutional ownership externalities and supplier innovation" in the Journal of Corporate Finance.

Abstract:

Many emerging markets allow foreign investment as a way to reform domestic markets. Extant studies have found a positive externality on innovation brought forth by foreign direct investment (FDI); however, we know very little about the externality of another form of foreign investment, ownership by foreign institutional investors (FII), on innovation. In this paper, we document one form of FII externality by showing that foreign institutional ownership of the customer firm results in higher supplier innovation. We also show that the FII externality on supplier innovation is stronger when customers have more influence on the suppliers and when the FIIs can facilitate information flow better. Our findings suggest that the real impact of FII can go beyond the underlying firms, and promoting FII may benefit firms, especially smaller firms in emerging countries that do not directly have foreign ownership.

Keywords: Foreign institutional investors;Supply chain;Innovation;Information asymmetry;Knowledge spillovers

Link: https://www.sciencedirect.com/science/article/pii/S0929119923000706

Teacher profile

Bingxuan Lin is a Professor of Finance at University of Rhode Island. He received his Ph.D. from Georgia State University in 2001. His research focuses on mergers and acquisitions, financial analysts’ forecasts, corporate governance and Chinese capital markets. He has published in various academic and practitioner journals including the Journal of Risk and Insurance, Journal of Financial Research, Journal of Accounting and Public Policy, Pacific Basin Finance Journal, Journal of American Taxation Association, and Financial Analyst Journal. He currently teaches both undergraduate and graduate corporate finance courses.