TY - JOUR
T1 - How outside directors facilitate corporate R&D investment? Evidence from large Korean firms
AU - Yoo, Taeyoung
AU - Sung, Taeyoon
N1 - Publisher Copyright:
© 2014 Elsevier Inc.
PY - 2015/6/1
Y1 - 2015/6/1
N2 - This paper examines how outside directors facilitate corporate R&D investment in the face of family control and the discrepancy between share ownership and decision control. Our panel regression analysis of large Korean firms (1998 to 2005) shows that mere addition of a shareholder-oriented mechanism, namely outside directors, is not effective for promoting R&D intensity. However, the disciplining role of outside directors can become valid for R&D intensity by moderating the negative influence of the discrepancy when a firms' growth opportunity is high. In addition, family control is positively related to a firm's R&D investment when the firm's growth opportunity is low. Thus, we argue that the strategic management of organizational change in corporate governance should take into account the disciplining role of shareholder-oriented mechanisms in the context of ownership structure and a firm's strategic position.
AB - This paper examines how outside directors facilitate corporate R&D investment in the face of family control and the discrepancy between share ownership and decision control. Our panel regression analysis of large Korean firms (1998 to 2005) shows that mere addition of a shareholder-oriented mechanism, namely outside directors, is not effective for promoting R&D intensity. However, the disciplining role of outside directors can become valid for R&D intensity by moderating the negative influence of the discrepancy when a firms' growth opportunity is high. In addition, family control is positively related to a firm's R&D investment when the firm's growth opportunity is low. Thus, we argue that the strategic management of organizational change in corporate governance should take into account the disciplining role of shareholder-oriented mechanisms in the context of ownership structure and a firm's strategic position.
KW - Corporate governance
KW - Discrepancy
KW - Outside director
KW - R&D investment
KW - Shareholder orientation
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U2 - 10.1016/j.jbusres.2014.11.005
DO - 10.1016/j.jbusres.2014.11.005
M3 - Article
AN - SCOPUS:84961358710
SN - 0148-2963
VL - 68
SP - 1251
EP - 1260
JO - Journal of Business Research
JF - Journal of Business Research
IS - 6
ER -