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Corporate governance and research and development: Evidence from Japan

Author

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  • Kaoru Hosono
  • Masayo Tomiyama
  • Tsutomu Miyagawa

Abstract

This paper investigates the effects of the ownership structure on the R&D intensity. Using the Japanese machine-manufacturing firm data from 1987 till 1998, we first found that the effects of R&D on stock market valuation and TFP growth were significantly positive in the latter half of the 1990s. Next, analyzing the determinants of the R&D intensity in 1998, we found that the shareholding ratios of large shareholders and the leverage ratios were positively correlated with R&D intensity, while the proportion of bank loans to total debt was negatively correlated with it. These results are consistent with the hypotheses that stress the disciplinary roles of large shareholders and debt. It is also consistent with a bank's holdup hypothesis. Finally, comparing the results of 1998 with those of 1989, we found that the positive roles of keiretsu affiliation and cross-shareholdings disappeared during the last decade.

Suggested Citation

  • Kaoru Hosono & Masayo Tomiyama & Tsutomu Miyagawa, 2004. "Corporate governance and research and development: Evidence from Japan," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(2), pages 141-164.
    • Handle: RePEc:taf:ecinnt:v:13:y:2004:i:2:p:141-164
    DOI: 10.1080/10438590410001628125
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    1. Andy Cosh & Xiaolan Fu & Alan Hughes, 2005. "Management characteristics, collaboration and innovative efficiency: evidence from UK survey data," Working Papers wp311, Centre for Business Research, University of Cambridge.
    2. Czarnitzki, Dirk & Kraft, Kornelius, 2009. "Capital control, debt financing and innovative activity," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 372-383, August.
    3. Hamadi FakhFakh & Rim Zouari-Hadiji, 2011. "Dettes financières et investissement en R&D:une étude comparative," Working Papers CREGO 1110302, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    4. repec:asi:ajoerj:2014:p:468-487 is not listed on IDEAS
    5. MIYAKAWA Daisuke & TAKIZAWA Miho, 2013. "Time to IPO: Role of heterogeneous venture capital," Discussion papers 13022, Research Institute of Economy, Trade and Industry (RIETI).
    6. Surroca Aguilar, Jorge & Tribo Gine, José Antonio & Berrone, Pascual Alberto, 2005. "The influence of blockholders on R and D investments intensity : evidence from Spain," DEE - Working Papers. Business Economics. WB wb054611, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    7. Zhong, Meirui & Huang, Gangli & He, Ruifang, 2022. "The technological innovation efficiency of China's lithium-ion battery listed enterprises: Evidence from a three-stage DEA model and micro-data," Energy, Elsevier, vol. 246(C).
    8. Ortega-Argilés , Raquel & Moreno, Rosina, 2009. "Evidence on the role of ownership structure on firms’ innovative performance," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 15, pages 231-250.
    9. Ogawa, Kazuo, 2007. "Debt, R&D investment and technological progress: A panel study of Japanese manufacturing firms' behavior during the 1990s," Journal of the Japanese and International Economies, Elsevier, vol. 21(4), pages 403-423, December.
    10. Ahmed Hassanein & Jamal Ali Al-Khasawneh & Hany Elzahar, 2022. "R&D expenditure and managerial ownership: evidence from firms of high-vs-low R&D intensity," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 21(3), pages 654-672, January.
    11. Sellami Basma, 2008. "Gouvernement D'Entreprise Et Investissement En R&D : Une Etude Sur Le Sbf 250," Post-Print halshs-00525983, HAL.
    12. Hamza Fadhila & Azouzi Mohamed Ali & Jarboui Anis, 2014. "CEO's commitment bias, ownership concentration, and innovation decision: Behavioral management of CEO's discretion," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-24, December.
    13. Bernardina Algieri & Antonio Aquino & Marianna Succurro, 2020. "The Impact of Cash-Flow and the Main Components of the Capital Structure on Innovative Performances of European Firms," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    14. Filippo Belloc & Eleonora laurenza & Maria Alessandra Rossi, 2015. "Corporate Governance and Sectoral Patterns of Innovation: Evidence from Italian Manufacturing Industries," Department of Economics University of Siena 706, Department of Economics, University of Siena.
    15. Filippo Belloc & Eleonora Laurenza & M. Alessandra Rossi, 2016. "Corporate governance effects on innovation when both agency costs and asset specificity matter," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 25(6), pages 977-999.
    16. HOSONO Kaoru & TAKIZAWA Miho & TSURU Kotaro, 2009. "Mergers, Innovation, and Productivity: Evidence from Japanese manufacturing firms," Discussion papers 09017, Research Institute of Economy, Trade and Industry (RIETI).
    17. Peter-Jan Engelen & Marc van Essen, 2013. "Effects of firm-level corporate governance and country-level economic governance institutions on R&D curtailment during crisis times," Chapters, in: Mehmet Ugur (ed.), Governance, Regulation and Innovation, chapter 3, pages 58-85, Edward Elgar Publishing.
    18. Rim Zouari-Hadiji & Ghazi Zouari, 2010. "Gouvernance interne et investissement en R&D : une comparaison internationale," Working Papers CREGO 1100102, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    19. Zhipeng Zang & Qiwei Zhu & Helena Mogorrón-Guerrero, 2019. "How Does R&D Investment Affect the Financial Performance of Cultural and Creative Enterprises? The Moderating Effect of Actual Controller," Sustainability, MDPI, vol. 11(2), pages 1-19, January.
    20. Chuanyi Wang & Jiale Yang & Zhe Cheng & Chaoqun Ni, 2019. "Postgraduate Education of Board Members and R&D Investment—Evidence from China," Sustainability, MDPI, vol. 11(22), pages 1-17, November.
    21. 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.
    22. Marianna Succurro & Giuseppina Damiana Costanzo, 2019. "Ownership structure and firm patenting activity in Italy," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(2), pages 239-266, June.
    23. Munari, Federico & Oriani, Raffaele & Sobrero, Maurizio, 2010. "The effects of owner identity and external governance systems on R&D investments: A study of Western European firms," Research Policy, Elsevier, vol. 39(8), pages 1093-1104, October.

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