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http://dx.doi.org/10.5392/JKCA.2017.17.05.008

Managerial Ownership and R & D Investment in the Chinese Firms : Comparison between State_Owned Firms and Private_Owned Firms  

Cho, Young-Gon (상명대학교 글로벌경영학과)
Zhou, Xiao Long (상명대학교 대학원 국제통상학과)
Zhang, Xiao Pan (상명대학교 대학원 국제통상학과)
Publication Information
The Journal of the Korea Contents Association / v.17, no.5, 2017 , pp. 8-17 More about this Journal
Abstract
Using 1855 observations from 5 years-371 firms panel data during 2010 to 2014 in Chinese stock exchanges, this study examines the impact of managers' ownership on R & D expenditures. The empirical study finds that when firms are state-owned, managers' ownership have negative relation with the level of R & D expenses as well as the likelihood of executing R & D investment, implying that managers are less likely to invest in high risky projects due to managerial ownership's entrenchment effects to pursue private benefits rather than alignment of interest effect as shareholders. The empirical study also finds that when firms are private-owned, managerial ownership are inverse U shaped related to the level of R & D expenses, implying that managers are less likely to invest in high risky projects due to increasing risk aversion resulting from concentration of private wealth at its high level while managers are more likely to invest in high risky projects due to increasing incentives as shareholders at its low level. The results support that the effects of managerial ownership on R & D expenses may be different according to the ownership type of Chinese listed firms.
Keywords
Managerial Ownership; R & D Investment; Chinese Firms; Agency Costs;
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