The Influence Of Corporate Internal Governance On R&D Investment

The studies on the influencing factors of the corporate R&D investment have been always the leading research field in the world over the years. The existing studies indicate that the corporate internal governance puts the influential function to R&D investment. However, there is no agreement that how the corporate internal governance influence R&D investment and to what extent the influence is. And the existing studies are focused on certain aspects of the corporate internal governance, such as ownership structure, board governance, executive incentive, and lack the study of the corporate internal governance as a whole on R&D investment.In this paper, R&D intensity is treated as the dependent variable, on the basis of the study on the subitems of the corporate internal governance on R&D investment, such as ownership structure, board governance, executive incentive, the paper tries to build the composite index of the corporate internal governance, and presents the study on the influence of taking internal governance as a whole level on R&D investment. The empirical results show that overall, the internal governance index does have a significant positive impact on R&D investment. The subitem results are as follows: the actural controller on R&D investment is not sure, and state-controlling is not benefit to R&D investment; the proportion of the shareholding of the first majority shareholder shows negative correlation with R&D investment, mainly because most of the first majority shareholders are state-holding and its high shareholding proportion, and the stockholder's rights don't keep in balance; the shareholding proportion of the executives is relevant with R&D investment, but the sign is uncertain, in corporations of small scale and advanced technology the shareholding proportion of executives shows positively correlated with R&D investment, and neither is it in corporations of non-high technology; the number of board meeting by communication gives positive impact on R&D investment; in corporations of small scale and advanced technology, the proportion of independent directors is positively correlated with R&D investmen; in corporations of small scale and low debt level, two positions unity can promote R&D investment; the composite index of the corporate internal governance has a significant positive impact on R&D investment.According to the empirical results, this paper presents the following recommendations to the existing problem of the corporate internal governance and R&D investment, which are that corporations have to increase their ability of internal governance, optimize the ownership structure of the listed corporations, and facilitate the counterbalance of stock ownership, bring the encouragement of executives into operation and increase enthusiasm in implementing technological innovation. Besides, they also have to perfect the function and structure of the board of directors, raise the efficiency and scientific nature of technological innovation, promote its whole level of internal governance and strengthen the competition among corporations, lay stress on technological innovation and increase R&D investment.