||The Effect of Corporate Governance on
The Wealth Effect of R&D Spending Increase Announcements
||Institute of International Business
Continual R&D is often the key to companies’ growth and competitiveness; therefore, companies put emphasis on R&D spending investment. Although R&D spending investments are companies’ growth engine, we still do not have a consistent conclusion of increase R&D spending announcement. The previous studies showed us mixed evidence. Many scholars are interested in what caused these different evidences.
But from these inconsistent phenomena, what we can make sure is that in the outside shareholders’ point of view, they think not all R&D spending program will create value. They think companies do so partly because there are investment opportunities but partly it might be managers going for their own interests. The reason to make outside shareholder think differently is because it’s difficult for them to get the detail information about what the companies really do when companies announce increasing R&D spending. Therefore, we can know that there exist high information asymmetry between outsider shareholders and company announcing R&D spending; thus, it causes investors much hard to estimate the value of R&D spending.
Because of the information asymmetry, it makes outside shareholders have to guess the purpose of R&D spending; therefore there is inconsistent phenomena on firm value when R&D spending announcement. Here comes one mechanism called“Corporate Governance”. Corporate Governance is the company “constitution” that is designed to establish the relation between managers and shareholders so that the interest of managers and shareholders can be aligned and that outside investors can be protected against expropriation by insiders. Therefore, in this research, we want to examine the companies adopting good Corporate Governance might have positive firm value when they announce R&D spending.
Here we use three Corporate Governance variables: Institutional Holding, Insider Holding and Analysts Following to test the relation with stock market reactions to see if when companies adopting good Corporate Governance have R&D spending increase announcement, stock market have more positive reactions on its stock price.
Our findings support three hypotheses. From the result, We find out when companies adopt good Corporate Governance, shareholders may have much confidence on them and believe the purpose of their R&D spending announcement is benefit for whole shareholders not only for manager’s interest; therefore, stock market have more positive reactions on its stock price.
第一章 緒論 1
第二章 文獻回顧 3
第三章 資料介紹與分析方法 13
第四章 研究結果分析 22
第五章 結論與建議 30
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