Institutional ownership and marketing myopic management

While marketing literature highlights both short- and long-term detrimental effects of marketing myopic management on firm performance, understanding of its antecedents is rather limited. This paper aims to determine if a certain level of transient institutional investor ownership influences a firm's marketing as well as research and development (R&D) investment decisions. Drawing on agency theory, the effects of institutional investor are examined using a two-stage panel logit regression with instrument variables (IV). Empirical results show that a strong presence of short-term institutional investors leads to the practice of marketing myopic management. The transient institutional investors encourage managers to invest less in marketing and R&D as an effort to artificially inflate current-term performance. We propose some policy suggestions that might be used to reduce the practice of myopic management.