Pension Fund Investment and Firm Innovation

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We use a unique database on domestic pension fund investment to analyze the re-lationship between pension fund investment and innovation within Danish firms. We find a significant positive association between pension fund investment and various measures of innovation, including green technologies for climate change mitigation and adaptation. However, this relationship is much weaker in highly competitive indus-tries, suggesting that pension funds encourage innovation by monitoring and holding managers accountable. Our analysis also shows that pension funds foster innovation by providing stable long-term capital. Overall, our study highlights the important role of pension funds in driving firm innovation, particularly by reducing managerial slack and by supplying stable, long-term capital.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherDepartment of Economics. Copenhagen Business School
Number of pages67
Publication statusPublished - 2024
SeriesWorking Paper / Department of Economics. Copenhagen Business School


  • Pension Fund Investment
  • Innovation
  • R&D

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