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The separate and joint effects of the market for corporate control and board effectiveness on R&D valuation

Version 2 2024-06-13, 11:32
Version 1 2018-04-23, 16:21
journal contribution
posted on 2024-06-13, 11:32 authored by S Chen, B Srinidhi, L Su, JY Tong
This study finds that stronger market control (measured as fewer anti-takeover provisions) and more effective boards (measured as boards that are more independent and for which independent directors have more outside directorships) are both associated with higher R & D valuation. Furthermore, stronger market control (more effective board governance) is associated with higher R & D valuation only in the presence of weaker board governance (market control). Taken together, the results are consistent with the interpretation that both the market for corporate control and effective boards mitigate agency conflicts arising from R & D investments and improve the market valuation of R & D. Furthermore, the two mechanisms act as substitutes in doing so. JEL Classification: G34, G32, M41.

History

Journal

Australian journal of management

Volume

43

Pagination

203-224

Location

London, Eng.

ISSN

0312-8962

eISSN

1327-2020

Language

eng

Publication classification

C Journal article, C1 Refereed article in a scholarly journal

Copyright notice

2017, The Author(s)

Issue

2

Publisher

Sage