Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298015 
Year of Publication: 
2024
Series/Report no.: 
I4R Discussion Paper Series No. 134
Publisher: 
Institute for Replication (I4R), s.l.
Abstract: 
Aghion, Van Reenen and Zingales (2013) find that institutional ownership causes an increase in innovation as measured by citation-weighted patent counts. To identify a causal effect, they use membership in the S&P 500 as an instrument for institutional ownership in a panel regression. We first replicate all regression tables in Aghion et al., and then test for robustness, mainly by adding in firm and sector*year fixed effects. We find that the positive relationship between institutional ownership and innovation is robust in 22% of robustness checks. On average, 2nd stage z-scores were just 42.7% of the original study. We find that when we include firm fixed effects, membership in the S&P 500 actually has a negative (though significant only at the 10% level) impact on institutional ownership (among non-indexed funds). Lastly, we find that the original control-function IV regression suffers from multi-collinearity, complicating inference.
Subjects: 
Innovation
Patents
Institutional Investment
JEL: 
G23
G32
L25
M10
O31
O34
Document Type: 
Working Paper

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