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

Shimin CHEN, Bin SRINIDHI, Lixin SU, Jamie TONG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

Abstract

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.
Original languageEnglish
Pages (from-to)203-224
Number of pages22
JournalAustralian Journal of Management
Volume43
Issue number2
Early online date17 Aug 2017
DOIs
Publication statusPublished - May 2018

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Board effectiveness
Market for corporate control
Corporate boards
Antitakeover provisions
Market valuation
Substitute
Governance
Independent directors
Agency conflict
Market governance

Keywords

  • Board
  • market for corporate control
  • R&D valuation

Cite this

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The separate and joint effects of the market for corporate control and board effectiveness on R&D valuation. / CHEN, Shimin; SRINIDHI, Bin; SU, Lixin; TONG, Jamie.

In: Australian Journal of Management, Vol. 43, No. 2, 05.2018, p. 203-224.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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