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Agency Costs, Management Stockholding, and Research and Development Expenditures
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- Authors
- Issue Date
- 1992-04
- Citation
- Seoul Journal of Economics, Vol.5 No.2, pp. 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
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