Rent appropriation of knowledge-based assets and firm performance when institutions are weak : A study of Chinese publicly listed firms
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › Not applicable › peer-review
|Journal / Publication||Strategic Management Journal|
|Early online date||23 Mar 2016|
|State||Published - Apr 2017|
|Link to Scopus||https://www.scopus.com/record/display.uri?eid=2-s2.0-84971280817&origin=recordpage|
Managerial summary: Investing in knowledge-based intangible assets (e.g., R&D) is an important value-creation activity for the firm. Such value creation process can be facilitated by large shareholders and powerful managers, who can then take an advantageous position with critical insider information on these valuable intangible assets and therefore enjoy more opportunities to appropriate more value from them, leaving less value for other minority shareholders. The value distribution becomes increasingly skewed against minority shareholders when the institutional protection for them is weak. Indeed, in a large sample of Chinese publicly listed firms, we found that R&D investment becomes less positively associated with firm financial performance with the presence of large shareholders, high managerial equity, or CEO/Chairman duality, especially in Chinese provinces with weak institutional development.
- managerial discretion, principal–principal conflict, rent appropriation, research and development, transition economies