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The Effect of Ownership Concentration on R&D Decisions in Korean Firms
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- Authors
- Issue Date
- 2012-01
- Citation
- Seoul Journal of Economics, Vol.25 No.1, pp. 89-110
- Keywords
- Ownership concentration ; R&D ; Panel data
- Abstract
- The current study examines the effect of ownership concentration
on R&D investment by investigating a large panel data set of Korean
listed firms. Theoretically, concentrated ownership structure can be
an alternative to mitigate the agency problem caused by the separation
of ownership and control in a dispersed ownership structure.
However, whether ownership concentration positively affects firm
R&D decisions is not obvious due to the contrasting effects of large
shareholders: risk averseness and long-term orientation. The present
study uses several econometric techniques, fixed effects FGLS regression,
dynamic GMM regression, and subsample regressions, and shows
that the positive effect of ownership concentration on R&D is confirmed
in Korea. A non-linear relation between ownership concentration
and investment is not significant, and neither are the effects of
foreign investors and institutional investors. The results of the subsample
regressions indicate that the positive effect of ownership concentration
is significant in small firms, R&D intensive firms, and
non-chaebol firms.
- ISSN
- 1225-0279
- Language
- English
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