How does common institutional ownership affect the high-quality development of private manufacturing firms: based on the perspective of R&D investment

The high-quality development of private manufacturing firms is important for enhancing China's international competitiveness. In this paper, we test how common institutional ownership affects private manufacturing firms' R&D investment, a decision that relates to firms' long-term value creation. Using data from listed private manufacturing firms in China from 2009 to 2022, we find that common institutional ownership significantly promotes private firms' R&D investment, a finding that still holds after robustness tests using propensity score matching, replacing key variables and so on. The mechanism analysis suggests that common institutional ownership mainly plays a resource effect, which promotes R&D investment by alleviating the financing constraints of private firms. Finally, we also find that common institutional ownership can play a greater role when economic policy uncertainty is high and the level of analyst following is high. This study provides new empirical evidence that firms can benefit from common institutional ownership and provides a reference for authorities to guide common institutional investors.