What determines firms’ R&D intensity in business groups with cross-ownership structures?

Taeyoon Sung, Chang-Yang Lee (drcylee@kaist.ac.kr) and Hyeonmi Ahn

Industry and Innovation, 2017, vol. 24, issue 6, 633-658

Abstract: This paper examines the impact of group-controlling shareholders’ interests on the R&D decision of group-affiliated firms in business groups with cross-ownership structures, especially with regard to the impact of control-ownership disparities or cash-flow rights. We show that R&D intensity across group-affiliated firms, in business groups with cross-ownership structures, is higher when control-ownership disparities are low or when group-controlling shareholders have higher cash-flow rights. Particularly in publicly listed firms, we find that the cash-flow rights of group-controlling shareholders are one of the most important determinants of the R&D intensity for group-affiliated firms.

Date: 2017
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DOI: 10.1080/13662716.2016.1261694

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