Foreign institutional investors hold over one-fifth of the total market value of the French stock market. Thus, it is important to analyse their influence on corporate investment decisions. This study investigates the impact of foreign institutional ownership on R&D activities. We examine whether these investors enhance or impede R&D investment intensity. Dynamic panel data analysis is applied to a sample of listed French high-tech firms over the period 2008–2014. Our results show that foreign institutional ownership encourages R&D investment while domestic institutional ownership dampens it. Foreign institutional ownership can act as a monitoring mechanism that reduces managerial myopia and encourages long-term and risky investment to enhance firm value.
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