Corporate Governance and the Efficiency of Government R&D Grants

Using the unique grant level data, this paper shows that government R&D grants to private firms lead to more innovation when independent monitoring (e.g. outside directors) in the grant receiving firms is stronger, but to less innovation when chaebol influence (e.g. affiliated ownership) is stro...

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Bibliographic Details
Published in:Global economic review 2021, 50(4), , pp.293-309
Main Authors: Kwon, Illoong, Park, Chan-Young
Format: Article
Language:English
Subjects:
Chaebol
Corporate governance
government R&D grants
Grants
Money
overstatement
Ownership
R&D
Research & development
경제학
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Summary:Using the unique grant level data, this paper shows that government R&D grants to private firms lead to more innovation when independent monitoring (e.g. outside directors) in the grant receiving firms is stronger, but to less innovation when chaebol influence (e.g. affiliated ownership) is stronger. However, the direct effect of independent monitoring on reported innovation is negative, while that of chaebol influence is positive. These results are consistent with the hypotheses that independent monitoring reduces the misuse of grant money; increases the efficiency of managing R&D grants; and reduces the overstatement of grant outcomes, while chaebol influence does the opposite.
ISSN:1226-508X
1744-3873
DOI:10.1080/1226508X.2021.1908156