Do the Type and Number of Blockholders Influence R&D Investments? New evidence from Spain

• Date: 01 September 2007
• Author: Pascual Berrone,Josep A. Tribo,Jordi Surroca
• Published date: 01 September 2007
• DOI: http://doi.org/10.1111/j.1467-8683.2007.00622.x

Do the Type and Number

of Blockholders Inf‌luence

R&D Investments? New evidence

from Spain

Josep A. Tribo*, Pascual Berrone and Jordi Surroca

Using data from 3,638 Spanish f‌irms between 1996 and 2000, this article studies the relation-

ship between the presence of large shareholders in the ownership structure of f‌irms and R&D

investment. Consistent with our theoretical contention, our results indicate that the impact of

large shareholders on the R&D investment is (1) negative when blockholders are banks, (2)

positive when blockholders are non-f‌inancial corporations and (3) null when blockholders are

individuals. In addition, we f‌ind a systematic negative relationship between the number of

blockholders and R&D investment. Finally, we extend our study by analysing the inf‌luence

that the combined effect between blockholder type and R&D investment has on the f‌irm’s

economic performance. Results of this work provide relevant implications for policy makers

and academic research.

Keywords: Ownership structure, banks, institutional blockholders, non-f‌inancial blockhold-

ers, individual blockholders, R&D investment

Introduction

The ownership structure of f‌irms is recog-

nised as an important determinant of its

general investment policy and, in particular,of

its research and development (R&D) spending

(Lee and O’Neil, 2003; Porter, 1990). However,

there is no consensus regarding the effect of

ownership concentration on a f‌irm’s R&D

investment. To date, literature surrounding

this relationship has only provided mixed

results. While some studies showed a positive

relationship between large shareholders and

R&D investment (Hosono et al., 2004; Wahal

and McConnell, 2000), others found negative

(Yafeh and Yosha, 2003; Jones and Danbolt,

2003) or neutral associations (Francis and

Smith, 1995; Holderness and Sheehan, 1988).

In addition, previous studies have examined

this relationship in Anglo-American contexts

(Hoskisson et al., 2002; Porter, 1992, Tylecote

and Ramirez, 2006), and more recently some

comparative work with Japanese f‌irms has

been conducted (Lee, 2005; Lee and O’Neil,

2003), but very little is known about these rela-

tionships in continental Europe.1

The aim of this paper is to reconcile these

conf‌licting results by enriching the analysis

of the f‌irm’s ownership structure using the

Spanish case. The Spanish corporate system

has several institutional characteristics that

make it suitable in explaining the inf‌luence of

blockholders on R&D investments and distin-

guishes it from those considered in previous

research. We move a step further from the

simple characterisation of the stakeof the main

blockholders as the main determinant of a

f‌irm’s investment policy to incorporate two

features: (1) the type of blockholders and (2)

the number of blockholders necessary to

control a f‌irm. Previous research rested on the

assumption that shareholders have homo-

genous preferences for R&D strategies. Only

recently has the type of blockholder received

some attention (e.g. Kochhar and David, 1996;

Lee, 2005; Hoskisson et al., 2002). Extending

*Address for correspondence:

Universidad Carlos III, Depar-

tamento de Economía de la

Empresa, Madrid, 126, 28903

Getafe (Madrid), Spain. Tel::

34-916249321/34-916249607;

E-mail: joatribo@emp.uc3m.es

828 CORPORATE GOVERNANCE

Volume 15 Number 5 September 2007

© 2007 TheAuthors

Journal compilation © 2007 BlackwellPublishing Ltd, 9600 Garsington Road,

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