Abstract
R&D investment is a key factor for firms' core competence, but R&D investment needs managers‘ long term and strategic thinking and there exists information asymmetry on outside investors compared to inside investors. This paper examines the impact of foreign block investors and information asymmetry on firm's R&D investment.
Empirical results of non-financial firms listed on Korean Stock Market from 2002 to 2007 show that firstly, major shareholders decrease firms' R&D investment, which shows the risk averseness of major shareholders. Secondly, foreign block investors increase firm's R&D investment and R&D investment levels do not change when there do not exist foreign block investors in a firm. Thirdly, foreign block investors mediate major shareholders impact on R&D investment. Using analyst forecasts as firms' information asymmetry measure, foreign block investors' mediating role appears only when information asymmetry exists.
Empirical results of non-financial firms listed on Korean Stock Market from 2002 to 2007 show that firstly, major shareholders decrease firms' R&D investment, which shows the risk averseness of major shareholders. Secondly, foreign block investors increase firm's R&D investment and R&D investment levels do not change when there do not exist foreign block investors in a firm. Thirdly, foreign block investors mediate major shareholders impact on R&D investment. Using analyst forecasts as firms' information asymmetry measure, foreign block investors' mediating role appears only when information asymmetry exists.
| Translated title of the contribution | The Impact of Foreign Block Investors and Information Asymmetry on R&D Investment |
|---|---|
| Original language | Korean |
| Pages (from-to) | 127-147 |
| Number of pages | 21 |
| Journal | 국제경영리뷰 |
| Volume | 16 |
| Issue number | 4 |
| State | Published - Dec 2012 |