재무연구 제 권 호 (2012년 9월)
Asian Review of Financial Research, Vol., No..
pp.867~895
pp.867~895
Stock Market Valuation of R&D Expenditure and Corporate Governance
Hung-Kun Chen Assistant Professor Department of Banking and Finance Tamkang University, Tamsui, Taiwan
Li-Hong Hong Discipline of Finance, College of Management Yuan Ze University, Chung-Li, Taiwan
Yanzhi Wang Associate Professor Department of Finance National Taiwan University, Taipei, Taiwan
This paper examines whether firms with more research and development (R&D) expenditure earn higher return when they have good corporate governance. After controlling for many asset pricing factors in the existing literature, such as size, book-to-market ratio, momentum, asset growth, accruals, and abnormal capital expenditure, we find that R&D-intensity firms indeed earn higher stock returns when they experience well-established corporate governance. This finding suggests that good governance is able to prevent potential overinvestment in R&D spending and thereby increase the rate of returns on R&D spending firms. Namely, R&D strategy, in terms of buying well governance R&D investing firms, is more effective in well-governed firms.
Hung-Kun Chen
Li-Hong Hong
Yanzhi Wang
This paper examines whether firms with more research and development (R&D) expenditure earn higher return when they have good corporate governance. After controlling for many asset pricing factors in the existing literature, such as size, book-to-market ratio, momentum, asset growth, accruals, and abnormal capital expenditure, we find that R&D-intensity firms indeed earn higher stock returns when they experience well-established corporate governance. This finding suggests that good governance is able to prevent potential overinvestment in R&D spending and thereby increase the rate of returns on R&D spending firms. Namely, R&D strategy, in terms of buying well governance R&D investing firms, is more effective in well-governed firms.
