An empirical study on the relationship between managerial entrenchment, R&amp;D investment and corporate governance

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Science Research Management ›› 2014, Vol. 35 ›› Issue (7) : 99-106.

An empirical study on the relationship between managerial entrenchment, R&D investment and corporate governance

Li Bingxiang, Chen Ying, Li Yue

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Abstract

Based on Chinese listed companies in the manufacturing industry 2008-2010, the hierarchical regression analysis method was used to investigate the impact of managerial entrenchment on R&D investment under corporate governance mechanism in the transition period. Firstly, the relationship between managerial entrenchment and R&D investment was estimated; Secondly, incentive mechanism and restrictive mechanism as moderator were introduced into this research. They were used to study the impact of corporate governance mechanism on the relationship between the two others.The empirical findings indicated that there was a significant negative correlation between managerial entrenchment and R&D investment. Moreover, the low R&D investment under managerial entrenchment could be effectively inhibited by increasing managers' compensation and ownership concentration, while it would be promoted by the raise of the proportion of independent directors. And managerial ownership has no significant regulating effect on the relationship between managerial entrenchment and R&D investment.

Key words

managerial entrenchment / R&D investment / corporate governance mechanism / regulating effect

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Li Bingxiang, Chen Ying, Li Yue. An empirical study on the relationship between managerial entrenchment, R&D investment and corporate governance[J]. Science Research Management. 2014, 35(7): 99-106

References

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