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Corporate governance practices and companies' R&D orientation: evidence from European countries


  • Bruno van Pottelsberghe


This working paper empirically investigates if corporate governance practices affect the resources firms devote to R&D. The authors Florence Honoré, Federico Munari and Bruno van Pottelsberghe found that an executive remuneration system that is linked to the firm's financial performance has a particularly strong negative impact on R&D. This confirms the hypothesis that incentive mechanisms lead managers to focus on more predictable and easily measurable short-term activities,ultimately hampering the commitment to innovative projects.

Suggested Citation

  • Bruno van Pottelsberghe, 2011. "Corporate governance practices and companies' R&D orientation: evidence from European countries," Working Papers 492, Bruegel.
  • Handle: RePEc:bre:wpaper:492

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    References listed on IDEAS

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    Cited by:

    1. Driver, Ciaran & Guedes, Maria João Coelho, 2012. "Research and development, cash flow, agency and governance: UK large companies," Research Policy, Elsevier, vol. 41(9), pages 1565-1577.
    2. Nicholas Crafts & Alan Hughes, 2013. "Industrial Policy for the Medium to Long-term," Working Papers wp455, Centre for Business Research, University of Cambridge.
    3. Ozgur Arslan-Ayaydin & Darold Barnum & Mehmet Baha Karan & Atilla Hakan Ozdemir, 2014. "How is Moral Hazard Related to Financing R&D and Innovations?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 111-131.

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