Journal of Corporate Finance Vol. 101 2026
Less is more: Institutional investors and corporate venture capital
open access
Abstract
This study examines how passive institutional investors reshape corporate venture capital (CVC) investment decisions. We find that increases in passive institutional ownership lead firms to cut back CVC investments in non-core, high-risk, and low-quality ventures, with the reduction being more pronounced among firms subject to more severe managerial agency problems. Futhermore, the reduction of CVC investments leads to higher short-term announcement returns and improved long-term operating and innovation performance. The findings suggest that passive institutional investors mitigate managerial agency problems and improve innovation by disciplining CVC investment decisions.
- DOI
- 10.1016/j.jcorpfin.2026.103062
- Volume
- 101
- Pages
- 103062
- Language
- en
- Sources
- openalex crossref