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http://dx.doi.org/10.5762/KAIS.2016.17.12.162

Controlling Ownership and R &D Investment in Chinese Firms  

Cho, Young-Gon (Dept. of Global Business Administration, Sangmyung University)
Li, Chun-Hong (Dept. of International Trade and Business, Sangmyung University Graduate School)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.17, no.12, 2016 , pp. 162-169 More about this Journal
Abstract
Using 1795 observations from the 5 year-359 firm panel data collected during the period from 2009 to 2013 in Chinese stock exchanges, this study examines the impact of the controlling shareholders' ownership on R & D expenditure. This empirical study finds that when firms are state-owned, the controlling shareholders' ownership has a U shaped relation with the level of R & D expenses. A non-linear relation is also found when piece-wise regression models are applied. This empirical study also finds that when firms are private-owned, the controlling shareholders' ownership is negatively related to the level of R & D expenses, and no structural changes in the relation are found when piece-wise regression models are applied. These results support the hypothesis that the effects of the controlling shareholders' ownership on R & D expenses may differ depending on the ownership type of the controlling shareholders. This finding suggests that the differences in the controlling shareholders' incentives due to their ownership type should be considered when exploring the relation between the controlling shareholders' ownership and corporate strategic decisions.
Keywords
Chinese Firms; Controlling Ownership; Ownership Type; R & D Expenditure; State Ownership;
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