Agency theory and the context for R&D investment: Evidence from Korea
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- Yoo, T. & Rhee, M. Asian Bus Manage (2013) 12: 227. doi:10.1057/abm.2013.2
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Pitting the theoretical assumptions of agency theory against the characteristic governance mechanisms of a state-coordinated market economy, this study examines the effects of financial structure, ownership formation and ownership identity on corporate R&D investment. Using panel data on 100 large listed Korean firms, the study provides evidence that market-based governance mechanisms facilitate R&D investment. However, the findings also indicate that the idiosyncratic organizational characteristics of a society, such as business-group affiliation and state ownership in Korea, are not active in dividend payout and are positively related to R&D investment. This suggests that strategic management of changes in corporate governance requires contextual understanding of the two contrasting governance rationales.