Corporate Governance and Its Impact on R&D Investment in Emerging Markets

Marc Steffen Rapp and Iuliia A. Udoieva

Emerging Markets Finance and Trade, 2017, vol. 53, issue 10, 2159-2178

Abstract: Corporate R&D activities are inherently risky but also difficult to monitor. Against this background, we examine the impact of ownership concentration and legal shareholder rights protection on corporate R&D investments in emerging markets. Based on a comprehensive sample of publicly listed firms from 24 countries, we find that R&D intensity is lower in firms with (strategic) block ownership, and this effect is more pronounced in countries with stronger shareholder rights protection. This suggests that, similar to the situation in developed economies, dispersed ownership, which allows shareholders to diversify their investment risks, is beneficial for corporate R&D and that this effect is intensified by more developed institutions.

Date: 2017
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DOI: 10.1080/1540496X.2016.1248940

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