R&D and Insider Shareholding

Feng-Li Lin

Abstract


The purpose of this paper is to identify the optimal levels of insider shareholding and R&D spending, as a means of alleviating conflicts between managers and shareholders. This study analyzed whether insider shareholding affected R&D spending, employing a panel of 252 Taiwanese listed electronics companies, over a decade (2002–2011) term. When insider shareholding was less than 13.84%, R&D spending decreased by 0.05386% for each 1% increase in insider shareholding; When insider shareholding was more than 13.84%, R&D spending increased by 0.0275% for each 1% increase in insider shareholding. These results suggest that insiders holding a big part of equity were controlled by ultimate controllers related to family conglomerates, who generally have an incentive to decide R&D spending up to the maximum value of stockholders.


Full Text: PDF DOI: 10.5430/afr.v3n2p51

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Accounting and Finance Research
ISSN 1927-5986 (Print)   ISSN 1927-5994 (Online)

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