What determines firms' R&D intensity in business groups with cross-ownership structures?

This paper examines the impact of group-controlling shareholders' interests on the R&D decision of group-affiliated firms in business groups with cross-ownership structures, especially with regard to the impact of control-ownership disparities or cash-flow rights. We show that R&D inten...

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Bibliographic Details
Published in:Industry and innovation 2017-08, Vol.24 (6), p.633-658
Main Authors: Sung, Taeyoon, Lee, Chang-Yang, Ahn, Hyeonmi
Format: Article
Language:English
Subjects:
Business
business group
Business ownership
cash-flow right
Companies
control-ownership disparity
controlling shareholder
Determinants
Ownership
R&D
R&D intensity
Research & development
Stockholders
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Summary:This paper examines the impact of group-controlling shareholders' interests on the R&D decision of group-affiliated firms in business groups with cross-ownership structures, especially with regard to the impact of control-ownership disparities or cash-flow rights. We show that R&D intensity across group-affiliated firms, in business groups with cross-ownership structures, is higher when control-ownership disparities are low or when group-controlling shareholders have higher cash-flow rights. Particularly in publicly listed firms, we find that the cash-flow rights of group-controlling shareholders are one of the most important determinants of the R&D intensity for group-affiliated firms.
ISSN:1366-2716
1469-8390
DOI:10.1080/13662716.2016.1261694