Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
권호 표지
DOI QR코드

DOI QR Code

Nature of Company Ownership, the Dual Role of CEO and Board Chair, and R & D Investment Intensity

  • Meng, La-Mei (Division of Business Administration and Accounting, Kangwon National University) ;
  • Byun, Hae-Young (Division of Business Administration and Accounting, Kangwon National University)
  • Received : 2020.05.30
  • Accepted : 2020.06.25
  • Published : 2020.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

Purpose - This study examines the impact of company ownership nature and of the dual role of CEO and board chair on R & D investment intensity, as well as the moderating effect of this dual role. Most previous research focused on the impact of the dual role of CEO and board chair on firm performance. Design/methodology/approach - This study uses A-share companies listed on the Shenzhen and Shanghai stock exchanges in China from 2008 to 2017. The univariate and the multivariate regression analysis were hired In order to analyze the data. Findings - The results show that there is a significant negative relationship between state-owned companies and R & D investment intensity. In addition, there is a significant positive relationship between the dual role and R & D investment intensity. The effect of state ownership on R & D investment intensity is more negative when CEO-board chair duality exists. This means that in case of state-owned companies, if CEO serves as the board chair, the propensity to invest in R&D is further reduced. Research implications or Originality - This is a pioneering study that considers the joint effect of state-owned companies and dual role on R & D investment intensity in the Chinese economy.

Keywords

References

  1. Bai, C., L. C. Xu (2005), "Incentives for CEOs with Multitasks:Evidence from Chinese State-Owned Enterprises", Journal of Comparative Economics, 33, 517-539. https://doi.org/10.1016/j.jce.2005.03.013
  2. Baysinger, B. D. and R. E. Hoskisson (1989). "Diversification Strategy and R & D Intensity in large Multi-product Firms", Academy of Management Journal, 32(2), 310-332. https://doi.org/10.2307/256364
  3. Brickley, J. A., J. L. Coles, G.Jarrell (1997), " Leadership Structure: Separating the CEO and Chairman of the Board", Journal of Corporate Finance, 3(3), 189-220. https://doi.org/10.1016/S0929-1199(96)00013-2
  4. Byun, H. (2019), "The Timely Disclosure Behaviors of Delisted Companies: An Empirical Study of Korean Firms", Asia-Pacific Journal of Business, 10(4), 1-30.
  5. Chen C. H. V. and C. H. V., T. Y. D. Cheng (2011), "Investigating the Relationships Between CEO Duality, Shareholding and Entrepreneurial Performance: the Mediating Effect of R&D Intensity", International Journal of Management and Enterprise Development, 11(1), 52-68. https://doi.org/10.1504/IJMED.2011.042972
  6. Davidson W.N., P. Jiraporn, Y. S. Kim and C. Nemec (2004), "Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management and Agency Theory", Academy of Management Journal, 2, 267-275.
  7. Dong J. and Y. Gou (2010), "Corporate Governance Structure, Managerial Discretion, and the R & D investment in China", International Review of Economics and Finance, 19(2), 180-188 https://doi.org/10.1016/j.iref.2009.10.001
  8. Fama, E.F. and M. C. Jensen (1983), "Separation of Ownership and Control", The Journal of Law & Economics, 26(2), 301-325. https://doi.org/10.1086/467037
  9. Grossman, S. J.,O. D. Hart (1986), "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration", Journal of Political Economy, 94(4), 691-719. https://doi.org/10.1086/261404
  10. Guth, W. D. and A. Ginsberg (1990), "Guest Editors' Introduction: Corporate Entrepreneurship", Strategic Management Journal, 11, 5-15.
  11. Hart, O., and J. Moore (1990), "Property Rights and the Nature of the Firm", Journal of Political Economy, 98(6), 1119-1158. https://doi.org/10.1086/261729
  12. Holmstrom, B. (1989), "Agency Costs and Innovation", Journal of Economic Behavior and Organization, 12(3), 305-327. https://doi.org/10.1016/0167-2681(89)90025-5
  13. Hoskisson, R. E., M. A. Hitt, R. A. Johnson, and W. Grossman (2002), "Conflicting Voice: The Effects of Institutional Ownership Heterogeneity and Internal Governance on Corporate Innovation Strategies", Academy of Management Journal, 45, 697-716. https://doi.org/10.2307/3069305
  14. Jensen, M. C. and W. H. Meckling (1976), "Theory of the Firm:Managerial Behavior Agency Costs and Ownership Structure", Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
  15. Jin, X., G. Lei and J. Yu (2016), "Government Governance, Executive Networks and Enterprise R&D Expenditure", China Journal of Accounting Research, 9(1), 59-81. https://doi.org/10.1016/j.cjar.2015.09.001
  16. Jizi, M., and Nehme, R. (2018), "Board Monitoring and Audit Fees: the Moderating Role of CEO/Chair Dual Roles", Managerial Auditing Journal, 33(2), 217-243 https://doi.org/10.1108/MAJ-10-2016-1464
  17. Kao, L., and A. Chen (2020), "CEO Characteristics and R&D Expenditure of IPOs in Emerging Markets: Evidence from Taiwan", Asia Pacific Management Review, 1, 1-9.
  18. Lane, P.J., A. A. C. JR and M.H.Lubatkin (1998), "Agency Problems as Antecedents to Unrelated Mergers and Diversification: Amihud and LEV Reconsidered", Strategic Management Journal, 19(6), 555-578. https://doi.org/10.1002/(SICI)1097-0266(199806)19:6<555::AID-SMJ955>3.0.CO;2-Y
  19. Lee, W. and J. Kim (2019), "How Have Financialization and Offshoring Affected the Firm's Investment in Korea?", Asia-Pacific Journal of Business, 10(3), 1-16.
  20. Li, D. and L. Xia (2008), "Ownership Type, the Institutional Environment and R&D Intensity of Chinese Listed Firms", Journal of Finance and Economics, 31(4), 93-104. https://doi.org/10.3969/j.issn.1001-9952.2005.04.009
  21. Li, J. and Y. Tang (2010), "CEO Hubris and Firm Risk Taking in China: The Moderating Role of Managerial Discretion", Academy of Management Journal, 53(1), 45-68. https://doi.org/10.5465/AMJ.2010.48036912
  22. Liddle, B.T. (1997), "Privatization Decision and Civil Engineering Projects", Journal of Management in Engineening, 5, 73-78.
  23. Lim, Y. and B. Goh (2016), "A Study on Moderating Effects of Competitive Strategy between Determinants of FDI and Management Performance", Asia-Pacific Journal of Business, 7(1), 43-57.
  24. Lin C., P. Lin and Song (2010), "Property Rights Protection and Corporate R&D: Evidence from China", Journal of Development Economics, 93(1), 49-62. https://doi.org/10.1016/j.jdeveco.2009.04.006
  25. Lin, K. J. X. Lu, J. Zhang and Y. Zheng (2020), "State-owned Enterprises in China: A Review of 40 Years of Research and Practice". China Journal of Accounting Research, 13, 31-55. https://doi.org/10.1016/j.cjar.2019.12.001
  26. Lin, Z., Y. Chen and X. Qin (2013, July 17-19), "The Effects of Ownership Types on Enterprise Innovation Efficiency: Do Industrial and Regional Heterogeneity Matter?", The 20th International Conference on Management Science & Engineering, Harbin, P.R.China
  27. Manso, G. (2011), "Motivating Innovation", The Journal of Finance, 66, 1823-1860. https://doi.org/10.1111/j.1540-6261.2011.01688.x
  28. Miller, D.(1983), "The Correlates of Entrepreneurship in Three Types of Firms", Management Science, 29(7), 770-791. https://doi.org/10.1287/mnsc.29.7.770
  29. Millet-Reyes, B. (2004), "R&D Intensity and Financing Constraints". The Journal of Business and Economic Studies, 10(2), 38-53.
  30. Sadowski, B. M. and G. Sadowski-Rasters (2006), "On the Innovativeness of Foreign Affiliates: Evidence from Companies in The Netherlands", Research Policy, 35, 447-462. https://doi.org/10.1016/j.respol.2006.01.003
  31. Teng, D. and J. Yi (2017), "Impact of Ownership Types on R&D Intensity and Innovation Performance-Evidence from Transitional China", Frontiers of Business Research in China, 11(1), 1-25. https://doi.org/10.1186/s11782-017-0005-7
  32. Tuggle, C. S., D. G. Sirmon, C. R. Reutzel and L. Bierman (2010), "Commanding Board of Director Attention: Investigating How Organizational Performance and CEO Duality Affect Board Members' Attention to Monitoring", Strategic Management Journal, 31(9), 946-968. https://doi.org/10.1002/smj.847
  33. Wang, D., D. Sutherland, L. Ning, Y. Wang and X. Pan (2018), "Exploring the Influence of Political Connections and Managerial Overconfidence on R & D Intensity in China's Large-scale Private Sector Firms", Technovation, 69, 40-53. https://doi.org/10.1016/j.technovation.2017.10.007
  34. White, H. (1980), "A heteroskedasticity-consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity", Econometrica: Journal of the Econometric Society, 48(4), 817-838. https://doi.org/10.2307/1912934
  35. Zhang A., Y. Zhang and R. Zhao (2003), "A Study of the R&D Efficiency and Productivity of Chinese Firms", Journal of Comparative Economics, 31, 444-464. https://doi.org/10.1016/S0147-5967(03)00055-6
  36. Zhou, K. Z., G. Y. Gao and H. Zhao (2017), "State Ownership and Firm Innovation in China: An Integrated View of Institutional and Efficiency Logics", Administrative Science Quarterly, 62(2), 375-404. https://doi.org/10.1177/0001839216674457