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Corporate governance’ impact on research and development

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  • Chu, Wai-Kwong
  • Yang, Nien-Tzu
  • Yang, Sheng-Yung

Abstract

This study examines the effects of legal and investor protection mechanisms on the efficiency of R&D. This study makes two contributions to the literature. First, when a company lists shares in a common law country or one with higher investor protection (i.e., a company has better country-level corporate governance), the R&D investments of companies create more value. Second, companies that issue ADRs generate higher value from their R&D investments than those that do not issue ADRs. For some companies without ADR issues, their R&D investments decrease the market value of the company. The issuance of ADR strengthens the level of supervision, reducing the agency problem and inducing a higher value of their R&D investment. To the best of our knowledge, no previous studies have examined this phenomenon.

Suggested Citation

  • Chu, Wai-Kwong & Yang, Nien-Tzu & Yang, Sheng-Yung, 2016. "Corporate governance’ impact on research and development," Journal of Business Research, Elsevier, vol. 69(6), pages 2239-2243.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:6:p:2239-2243
    DOI: 10.1016/j.jbusres.2015.12.036
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