Investor stewardship disclosure and firm R&D investment

Purpose- This study explores the association between institutional investors' stewardship activity, disclosed under Japan's Stewardship Code, and the R&D investments of their investee companies. Design/methodology/approach- Recognizing the pivotal role of R&D investment in long-term value creation, this study uses comprehensive data from institutional investor disclosures to assess the impact of stewardship activity on their investee companies. Findings- The findings show that investor stewardship activity is a factor that influences strategic R&D investment. Specifically, a positive association is found between code-compliant institutional investor shareholding and R&D investment, contingent on high levels of stewardship activity. Originality/value- By using stewardship disclosures to measure stewardship activity, this study sheds new light on institutional investors' role in promoting R&D investment. The findings suggest that stewardship regulation is a valid governance policy mechanism to the extent that it promotes stewardship activity. Moreover, the findings show that stewardship disclosures provide valuable information about the potential value enhancement associated with institutional shareholding.