Does director interlock impact corporate R&amp;D investment?

Han, Jie; Bose, Indranil; Hu, Nan; Qi, Baolei; Tian, Gaoliang

doi:10.1016/j.dss.2015.01.001

Cited by 38 publications

(34 citation statements)

References 40 publications

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“…Consistent with Luo and Nagarajan () and Han et al. (), we adopt a change specification to address this issue, that is, whether an analyst's decision to become an interlock specialist will impact the change in the analyst's earnings forecast for the focal firm. The model can be summarised as follows:

\begin{matrix} true \\ right normalΔ italicAccuracy & = & left α_{0} + α_{1} normalΔ italicInterlock_italicAnalyst \\ left + normalΔ italicControls + ε \end{matrix}

…”

Section: Resultsmentioning

confidence: 99%

“…Especially in the Chinese institutional context, Chen and Chen (2013) state that the issuance of accounting restatement can diffuse through director interlock among Chinese listed firms. Also, Han et al (2015a) document that R&D spending can diffuse among Chinese interlocked firms.…”

Section: The Effect Of Interlock Concentration On Analyst Forecast Acmentioning

confidence: 99%

“…However, it is likely that some unobservable time-invariant omitted variables may lead to the observed relationship between analysts' decisions to concentrate on interlocked firms and their forecast performance. Consistent with Luo and Nagarajan (2015) and Han et al (2015a), we adopt a change specification to address this issue, that is, whether an analyst's decision to become an interlock specialist will impact the change in the analyst's earnings forecast for the focal firm. The model can be summarised as follows:…”

Section: The Influence Of Omitted Variablesmentioning

confidence: 99%

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Interlock Concentration and Analyst Forecast Accuracy: Value Implications of Interlock

Han

Liu

2018

Australian Accounting Review

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From the perspective of information commonalities among firms with director interlock relationships, this study mainly investigates the outcomes of earnings forecasts by analysts who choose to concentrate on interlocked firms (analysts following both a firm and its interlocked partner firm in their research portfolio). Using interlocked A‐share firms listed in the Chinese Shanghai and Shenzhen Stock Exchanges from 2008 to 2013 as samples, we empirically find that analysts who concentrate on interlocked firms produce more accurate earnings forecasts than analysts who do not. In additional analysis, we also find that analysts with an interlock concentration provide superior earnings forecast quality for other non‐interlocked firms in their research portfolios. Finally, through examining the market reaction to interlocked firms, we find that analysts with an interlock concentration provide new information and improve information efficiency for the capital market.

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\begin{matrix} true \\ right normalΔ italicAccuracy & = & left α_{0} + α_{1} normalΔ italicInterlock_italicAnalyst \\ left + normalΔ italicControls + ε \end{matrix}

…”

Section: Resultsmentioning

confidence: 99%

Section: The Effect Of Interlock Concentration On Analyst Forecast Acmentioning

confidence: 99%

Section: The Influence Of Omitted Variablesmentioning

confidence: 99%

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Interlock Concentration and Analyst Forecast Accuracy: Value Implications of Interlock

Han

Liu

2018

Australian Accounting Review

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“…Adapted from prior literatures about R&D intensity, which represents an innovated firm's effort on R&D investment (Hashai and Almor 2008;Nunes, Serrasqueiro, and Leitão 2012;Honoré, Munari, and de La Potterie 2015), we define a term of BDA intensity to denote how much effort a health care wearable device firm has made on BDA investment. Prior R&D intensity studies have empirically examined the factors that significantly affect firms' optimal R&D intensity investments (Hashai and Almor 2008;Dabić et al 2012;Han et al 2015) and how their R&D intensity affects firms' performances on the market (Nunes, Serrasqueiro, and Leitão 2012;Wu 2012;Lee, Wu, and Pao 2014;Honoré, Munari, and de La Potterie 2015). Different from their works, we study health care wearable device firm's optimal specific R&D intensity (BDA intensity) investment and the consequences of firm's intensity on the market competition through an analytical framework, which has potentials to provide theoretical foundations to understand the R&D intensity choice.…”

Section: Literature Reviewmentioning

confidence: 98%

How big data and analytics reshape the wearable device market – the context of e-health

Lin

et al. 2015

International Journal of Production Research

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The wearable device can be a key link between health care and big data and analytics (BDA). The benefits of BDA in health care have been widely acknowledged, but the uncertainty of the implementation of BDA has led some firms to hesitate in adopting this technology. In this research, we are keen to answer the key questions of whether the wearable device firms would adopt the BDA strategy, and how much effort they would put into it. We propose a competition model between the wearable device firms with and without BDA strategies, and consider the consumer's preference towards BDA and network effects. Our model demonstrates that the investment on BDA directly affects the firm's equilibrium price, market share and profit and at the same time, this strategy also affects the rival's performances. When the firm with BDA strategy adopts different competition strategy: conservative or expansive, the outcomes of market are different. We also find that different market structures, fully covered and partially covered, have different impacts on the firms' competition when the consumers have heterogeneous preference on BDA strategy.

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“…Other reasons that explain the negative effect of the shares owned by other nonfinancial firms on corporate R&D is interorganizational imitation (Belenzon et al, ), resource dependence (Han et al, ), and social embeddedness theory (Pfeffer and Salancik, ). According to these approaches, some strategic corporate decisions such as R&D can be affected by the relations of the firm with the environment.…”

Section: Theoretical Background and Hypothesismentioning

confidence: 99%

Institutional framework, corporate ownership structure, and R&D investment: an international analysis

López‐Iturriaga

López-Millán

2016

R & D Management

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We combine agency theory with the law and finance approach to analyze how the legal protection of investors and the corporate ownership structure affect corporate investment in research and development (R&D). We use information from 956 firms from the five most R&D-intensive industries in 19 developed countries. Our results show that better protection of investors' rights by the institutional environment has a positive influence on corporate R&D. We also find that corporate ownership concentration works as a substitute for legal protection. This finding means that R&D investment of the firms in the countries with poor legal protection increases as ownership becomes more concentrated. Our results also show that the identity of shareholders has a relevant effect: Whereas banks and nonfinancial institutions as shareholders result in lower R&D, institutional investors as shareholders increase corporate investment in R&D.

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Does director interlock impact corporate R&D investment?

Cited by 38 publications

References 40 publications

Interlock Concentration and Analyst Forecast Accuracy: Value Implications of Interlock

Interlock Concentration and Analyst Forecast Accuracy: Value Implications of Interlock

How big data and analytics reshape the wearable device market – the context of e-health

Institutional framework, corporate ownership structure, and R&D investment: an international analysis

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