R&D investment and future firm performance: The role of managerial overconfidence and government ownership

The emerging markets undergo constant transformations and changes, and thus, a change of strategy can be critical for companies. However, the impact of R&D investment on firm performance and the role of the board of directors that makes decisions about a company’s innovative activities remain inconclusive. This paper investigates the relationship between a board of directors’ composition and structure in innovative companies and firm performance. Using the panel data of innovative Russian public companies that made R&D investments in 2011–2013, we found a positive relationship between the boards’ independence and ROA as an indicator of firm performance. Moreover, it was shown that innovative companies that establish a strategy committee will on average have a higher ROA ratio than innovative companies without such a committee. Innovative firms in emerging markets might consider creating strategic committees and increasing board independence to enhance their performance and increase the number of successful R&D investments.

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R&D Investments, Debt Capital, and Ownership Concentration: A Three-Way Interaction and Lag Effects on Firm Performance in China's Pharmaceutical Industry

Frontiers in Public Health ◽

10.3389/fpubh.2021.708832 ◽

2021 ◽

Vol 9 ◽

Author(s):

Chih-Yi Su ◽

Yao-Ning Guo ◽

Kuang-Cheng Chai ◽

Wei-Wei Kong

Keyword(s):

Firm Performance ◽

Interactive Effect ◽

Ownership Concentration ◽

Lag Effects ◽

Pharmaceutical Firms ◽

Debt Capital ◽

Financial Governance ◽

Lag Structure ◽

D Investment

The existing literature has yet to provide consistent evidence on the relationship between R&D investments and firm performance. The current study attempted to fill this gap in the literature by examining the effect of lag structure and the moderating role of financial governance, in terms of debt capital and ownership concentration, on the returns of R&D. Analyzing a sample of China's pharmaceutical firms from 2009 to 2018, we found that the effect of R&D upon growth begins in the second year after R&D spending and increases thereafter. There exists a vigorous debate about the choice between debt and ownership structure. To fill this gap, we proposed a three-way interactive effect. The results suggest that firms that invest heavily in R&D may achieve their highest performance when the use of debt capital and the extent of ownership concentration are both low. This study contributes to the R&D investments and financial governance literature by reconciling previous mixed evidence about the returns of R&D and the debt–equity choices on R&D investment decisions.

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A mediation analysis: Board of directors’ composition, R&D investment, and international firm performance

Corporate Ownership and Control ◽

10.22495/cocv18i3art9 ◽

2021 ◽

Vol 18 (3) ◽

pp. 104-119

Author(s):

Rim Zouari-Hadiji ◽

Ghazi Zouari

Keyword(s):

Firm Performance ◽

Board Of Directors ◽

Mediation Analysis ◽

Investment Decision ◽

Total Sample ◽

Inside Directors ◽

The Board Of Directors ◽

The One ◽

D Investment

The comprehension and the explanation of the research and development (R&D) investment behaviour are done within the framework of a reflection on corporate governance. This investment does not contribute to creating value only if it is framed by governance mechanisms which role is to keep organizational, agency, or transaction costs as low as possible. In this context, we try to determine whether an integrating model exists; one that measures the simultaneous effect of the characteristics of the board of directors on R&D and the firm performance in an international context. Our model seeks to identify whether the dominance of inside directors and the dual structure influence the level of R&D investment, the mediating variable, and hence the firm performance. Our empirical study was carried out on a total sample of 509 firms divided between 165 American firms, 173 Japanese firms, and 171 French firms over the period 2014 to 2019. The findings of the mediation analysis according to the approach of Preacher and Hayes (2004, 2008) show the significant role of mediation by R&D investment between, on the one hand, the dominance of inside directors and duality, and on the other hand, the firm performance. Differences in the configuration of board of directors (BD) in different countries thus lead to different attitudes to the fulfillment of the control task and the R&D investment decision, value creator

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Ownership Structure and Firm Performance in the Middle East: A Meta-Analysis

Journal of Risk and Financial Management ◽

10.3390/jrfm14120577 ◽

2021 ◽

Vol 14 (12) ◽

pp. 577

Author(s):

Yaseen Al-Janadi

Keyword(s):

Firm Performance ◽

Arab World ◽

Meta Analysis ◽

Middle Eastern ◽

Institutional Ownership ◽

Political Stability ◽

Government Ownership ◽

Inside Ownership ◽

The Relationship

This paper applies a meta-analysis method to investigate the moderating impact of political stability on the relationship between ownership identities and firm performance in the Middle Eastern countries (i.e., the Arab World). The study collected 105 correlations from 46 previous studies with 11,999 observations in 11 Middle Eastern countries. The findings show that most ownership identities such as institutional ownership, government ownership, inside ownership, and family ownership have positive relationship with firm performance. Another interesting finding shows that in countries with political instability, the level of ownership identities such as institutional ownership, foreign ownership, and inside ownership play an important role in controlling companies, which leads to firm performance. The meta-analysis results reveal that different levels of political stability have an impact on the role of the majority shareholders. The findings provide evidence that the performance of ownership identities in the Middle Eastern countries remains effective, especially with the existence of fair protection rights and political stability.

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