Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212263 
Year of Publication: 
2013
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 23/2013
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This study investigates whether institutional bond blockholders (i.e., bond funds that hold more than 5% of a firm's outstanding bonds) impede firm innovative activities, and if they do, through which channels. We find that long-term bond blockholders do not discourage firms from conducting innovative activities. Short-term bond blockholders, however, significantly reduce both firm investments in R&D and the innovative quality of these investments. Furthermore, their negative impact is stronger than the negative impact of short-term stockholders. Our results cannot be fully explained by short-term bondholders' a priori investment preferences and are robust to possible endogeneity concerns. Overall, they suggest that the option of the 'Wall Street walk' allows bondholders to exert considerable influence on firms' risk-taking decisions.
Subjects: 
Bondholder
Innovation
Investment Horizon
Wall Street Walk
JEL: 
G23
G31
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-42-4
Document Type: 
Working Paper

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