Corporate governance practices and companies’ R&D intensity: Evidence from European countries
By Florence Honoré, Federico Munari, Bruno van Pottelsberghe de la Potterie. 2015
164 citations recorded by the source corpus.
This paper empirically investigates whether corporate governance practices implemented to align shareholders’ and managers’ interests affect the resources firms devote to R&D. Two databases – one on governance ratings and one on R&D investment – are merged to obtain a multi-country, multi-sector sample of 177 European companies involved in R&D activities. The results suggest that limitations of anti-takeover devices and voting rights restrictions, a financial performance-based remuneration system for managers and a higher shareholders’ consensus at the annual general assembly are all negatively correlated with R&D intensity. In other words, governance practices that are designed to respond to the short-term expectations of financial markets might prove to be detrimental to long-term R&D investments.
Subfields: Accounting
View Paper: https://www.semanticscholar.org/paper/47a06f1071682b1c3763e9ee86cfb4a91d4b68b6
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Citations in the corpus
- Corporate governance reform and risk-taking: Evidence from a quasi-natural experiment in an emerging market (2020, background): “1 Another strand of literature contends that a negative relationship exists between excessive investor protection and value-relevant risk-taking, based on the argument that excessive shareholder empowerment leads to short-term opportunism at the cost of value-relevant, long-term (risky) investments ”
- R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets (2020, methodology): “(1998), Rajan and Zingales (1998) and Hsu et al. (2014) pointed out that better country level governance mechanisms, including investor protection, legal systems and financial development, may help to overcome the agency problem. Hillier et al. (2011), Xiao (2013), Pindado et al.”