Title: R&D, corporate governance, firm size and firm valuation: evidence from Taiwanese companies

Authors: Jang-Shee Barry Lin; Chunhui Liu

Addresses: Khalifa University of Science, Technology and Research, P.O. Box 127788, Abu Dhabi, UAE ' Khalifa University of Science, Technology and Research, P.O. Box 127788, Abu Dhabi, UAE

Abstract: Using a sample of 5829 Taiwanese firm-year observations over the 2008-2012 period, we examine the relationship between R&;38;D expenditure and firm valuation. We find a significant positive association between R&D investment and firm valuation as measured by two valuation measures: Tobin's Q and Market-to-book ratio while controlling corporate governance variables. In addition, we find that R&D growth is also a positive and highly significant variable. We also find a significant size effect, indicating the success of small firm R&D innovation. We find insider ownership to be a negative factor and institutional ownership to be positive. Different from US data, board size is positive, while board independence negative.

Keywords: R&D expenditure; research and development; firm valuation; Tobin's Q; market-to-book ratio; corporate governance; firm size; Taiwan; small firms; insider ownership; institutional ownership; board size; board independence.

DOI: 10.1504/IJCG.2015.074690

International Journal of Corporate Governance, 2015 Vol.6 No.2/3/4, pp.87 - 97

Received: 02 Oct 2015
Accepted: 02 Oct 2015
Published online: 13 Feb 2016 *

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