This paper empirically investigates whether corporate governance practices affect the resources firms devote to R&D. Two databases – one on governance ratings and the other on R&D intensity – are merged to obtain a multi-country, multi-sector sample of 279 European companies involved in R&D activities. The relationship is found to be negative: a higher governance score correlates with lower R&D intensity. An executive remuneration system that is linked to the firm’s financial performance has a particularly strong negative impact on R&D. Other factors include the equal treatment of shareholders and the absence of anti-takeover devices.

Corporate governance practices and companies' R&D orientation: Evidence from European countries

MUNARI, FEDERICO;
2011

Abstract

This paper empirically investigates whether corporate governance practices affect the resources firms devote to R&D. Two databases – one on governance ratings and the other on R&D intensity – are merged to obtain a multi-country, multi-sector sample of 279 European companies involved in R&D activities. The relationship is found to be negative: a higher governance score correlates with lower R&D intensity. An executive remuneration system that is linked to the firm’s financial performance has a particularly strong negative impact on R&D. Other factors include the equal treatment of shareholders and the absence of anti-takeover devices.
Academy of Management Annual Conference
1
25
Honore F; Munari F; Van Pottelsberghe de la Potterie B
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11585/110970
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