SHERP

Agency Costs, Management Stockholding, and Research and Development Expenditures

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Authors
Cho, Shin
Issue Date
1992
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 5 (No. 2 1992): 127-152
Keywords
R&D expenditures; management stockholding; R&D intensity
Abstract
This paper examines the relationship between management stockholding and the level of R&D expenditures of a firm. Agency theory implies that a manager is reluctant to undertake R&D projects. Considering that management stockholding generally works to reduce agency problems between shareholders and managers, we can expect a certain relationship between management stockholding and R&D intensity, although the theory fails to predict a monotonous relationship between these two. Empirical results show that R&D intensity rises as the importance of management stockholding increases in the manager's personal wealth. These results are consistent with the agency theory that management stockholding reduces agency problem.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/949
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.05(2) (Summer 1992)
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