In this paper we analyze the impact of corporate governance structures on innovation. Moving beyond the simple analysis of the ownership concentration-R&D investments link, we consider the moderating role of internal and external variables. In particular, we refer to the characteristics of the national financial markets and the identity of the controlling shareholders. We empirically test our hypotheses using a unique dataset of 701 firms publicly held in France, Italy and the United Kingdom and estimating a sample selection model to account for the potential bias related to discretional R&D disclosure. As predicted, our findings show that a higher share of institutional investors in national financial markets is negatively associated with R&D investments of widely-held corporations. Moreover, family ownership and financial investor ownership are negatively associated with R&D effort.