Ownership Structure and Managerial R&D Investment Myopic Behavior

• Main Authors: Chun-Hui Hsieh, 謝純慧
• Other Authors: Shou-Min Tsao
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/ybfg55

碩士 === 中原大學 === 會計研究所 === 98 === The primary objective of this study is to examine whether the ownership structure of Taiwanese electronic industry, measured by the divergence between the ultimate owners’ control and the equity ownership level create or reduce incentives for corporate managers to reduce investment in research and development (R&D) to achieve certain performance thresholds. These performance thresholds are defined as (1) to report positive profits, that is, to avoid losses; (2) to sustain prior year reported income, in other words, to avoid earnings decreases; (3) to meet analysts’ earnings forecast, in short, to satisfy market’s expectations. In addition to the entire sample, I also perform linear regression analysis to three subsamples of small decrease (SD), increase (IN) and large decrease (LD) in earnings. The empirical results indicate (1) in the entire sample, managers are less likely to cut R&D to reverse an earning decline when there is less divergence between the ultimate owners’ control rights and cash flow rights; (2) in the SD subsample, managers are less likely to cut R&D to achieve positive profits, prior year reported income and analysts’ earnings forecast when there is less divergence between the ultimate owners’ control rights and cash flow rights; (3) in the IN subsample, managers are less likely to cut R&D to achieve positive profits and prior year reported income when there is less divergence between the ultimate owners’ control rights and cash flow rights; (4) in the LD subsample, the managers’ myopic behavior is irrelevant to the divergence between the ultimate owners’ control rights and cash flow rights; (5) there is no significant relation between the factor of cash flow rights and the managers’ myopic behavior.