The effects of owner identity and external governance systems on R&D investments: A study of Western European firms

  • Munari F
  • Oriani R
  • Sobrero M
  • 63

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Abstract

This paper builds on agency and institutional theory to extend the analysis of the effects of ownership and control on R&D investments by considering the influence of different types of ownership and of institutional corporate governance systems. Our empirical analysis is based on a unique dataset of 1000 firms publicly-traded in six European countries (France, Germany, Italy, Norway, Sweden and the UK). Controlling for industry- and firm-level effects, our findings show that higher shareholding by families is negatively associated with R&D investment. Moreover, widely-held firms invest less in R&D in the United Kingdom than in Continental European countries, thus suggesting the existence of a greater pressure towards the reduction of R&D in market-based governance systems. The results are robust against possible sample selection biases due to firms' discretional R&D disclosure. © 2010 Elsevier B.V. All rights reserved.

Author-supplied keywords

  • Corporate governance
  • Owner identity
  • R&D investments
  • Western europe

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Authors

  • Federico Munari

  • Raffaele Oriani

  • Maurizio Sobrero

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