How do country-level governance characteristics impact the relationship between R&D and firm value?
[EN] This article addresses the question of how country-level governance characteristics moderate the market valuation of research and development (R&D). Using a valuation model and panel data from companies in the European Union, United States, and Japan, we find that effective corporate govern...
| Authors: | , , |
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| Format: | article |
| Status: | Published version |
| Publication Date: | 2015 |
| Country: | España |
| Institution: | Universidad de Salamanca (USAL) |
| Repository: | GREDOS. Repositorio Institucional de la Universidad de Salamanca |
| OAI Identifier: | oai:gredos.usal.es:10366/149739 |
| Online Access: | http://hdl.handle.net/10366/149739 |
| Access Level: | Open access |
| Keyword: | Market valuation Foster economic growth Social welfare I+D Financial system 5307.13 Teoría de la Inversión 5307.08 Teoría del Crecimiento Económico 5307.19 Teoría del Bienestar |
| Summary: | [EN] This article addresses the question of how country-level governance characteristics moderate the market valuation of research and development (R&D). Using a valuation model and panel data from companies in the European Union, United States, and Japan, we find that effective corporate governance allows the market to better assess a firm's R&D investments. This finding is the conjunction with the effect of the legal system, the financial system, and mechanisms of control. First, as effectiveness of investor protection increases, the market valuation of R&D projects also increases. Second, more developed financial systems do a better job assessing R&D. Third, effective control mechanisms reinforce the positive effect of R&D on a firm's market value. In sum, our findings shed light on how policymakers can increase the benefits from firms' R&D spending and thus foster economic growth and social welfare using these country-level governance characteristics. |
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