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Investment in R&D and Corporate Governance

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  • Valdemar Smith
  • Erik Strøjer Madsen

Abstract

The paper investigates the impact of ownership concentration on the likelihood that firms are involved in innovative activities or invest in research and development. We find that more dispersed ownership significantly increases the probability that a firm is engaged in innovation or invests in research and development. Moreover, the effect from ownership concentration is far more important for the incentive to innovate than the effect from product market concentration.

Suggested Citation

  • Valdemar Smith & Erik Strøjer Madsen, 2001. "Investment in R&D and Corporate Governance," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(2), pages 263-274.
    • Handle: RePEc:diw:diwvjh:70-20-13
    DOI: 10.3790/vjh.70.2.263
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    References listed on IDEAS

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    1. repec:dgr:rugsom:98b19 is not listed on IDEAS
    2. Erik Lehmann & Jürgen Weigand, 2000. "Does the Governed Corporation Perform Better? Governance Structures and Corporate Performance in Germany," Review of Finance, European Finance Association, vol. 4(2), pages 157-195.
    3. John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters, in: R&D, Patents, and Productivity, pages 233-248, National Bureau of Economic Research, Inc.
    4. Vossen, Robert W., 1998. "Strategic and tactical decisions, sunk costs and firm size effects in R&D," Research Report 98B19, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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    Cited by:

    1. Bruno van Pottelsberghe, 2011. "Corporate governance practices and companies' R&D orientation- evidence from European countries," Working Papers 492, Bruegel.
    2. Honoré, Florence & Munari, Federico & van Pottelsberghe de La Potterie, Bruno, 2015. "Corporate governance practices and companies’ R&D intensity: Evidence from European countries," Research Policy, Elsevier, vol. 44(2), pages 533-543.
    3. Driver, Ciaran & Guedes, Maria João Coelho, 2012. "Research and development, cash flow, agency and governance: UK large companies," Research Policy, Elsevier, vol. 41(9), pages 1565-1577.

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