Description:
Institutional owners hold an increasing share of the equity market in China. Despite the ubiquity of institutional investors, their effects on innovation remain unclear. This paper offers a novel empirical perspective by demonstrating that institutional ownership predicts information spillovers in corporate innovation. After classifying institutions as domestic and foreign, results indicate that domestic institutions exhibit higher information spillovers, whereas there is a negative correlation between foreign institutional ownership and information spillovers. When examining the channel, we find that institutional investors reduce financial constraints and pay attention to litigation risk of enterprises