R%D, corporate governance, firm size and firm valuation: evidence from Taiwanese companies

Jang-Shee Barry Lin and Chunhui Liu

International Journal of Corporate Governance, 2015, vol. 6, issue 2/3/4, 87-97

Abstract: Using a sample of 5829 Taiwanese firm-year observations over the 2008-2012 period, we examine the relationship between R&;38;D expenditure and firm valuation. We find a significant positive association between R%D investment and firm valuation as measured by two valuation measures: Tobin's Q and Market-to-book ratio while controlling corporate governance variables. In addition, we find that R%D growth is also a positive and highly significant variable. We also find a significant size effect, indicating the success of small firm R%D innovation. We find insider ownership to be a negative factor and institutional ownership to be positive. Different from US data, board size is positive, while board independence negative.

Keywords: R%D expenditure; research and development; firm valuation; Tobin's Q; market-to-book ratio; corporate governance; firm size; Taiwan; small firms; insider ownership; institutional ownership; board size; board independence. (search for similar items in EconPapers)
Date: 2015
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