TITLE:
Frequency of Board Meetings and R&D Investment Strategy: Evidence from OECD Countries
AUTHORS:
Aws AlHares, Collins Ntim, Osama Al-Hares, Ruba Al Abed
KEYWORDS:
R&D, Corporate Governance, Anglo-American Tradition, Continental European Tradition, OECD Countries, Frequency of Board Meetings
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.14,
October
24,
2018
ABSTRACT: This study seeks to examine the impact of frequency
of board meetings on R&D investment strategy in OECD countries. The study uses a panel data
of 200 companies from Anglo American and European countries between 2010 and
2014. The ordinary least square regression is used to examine the relationships.
Additionally, to alleviate the concern of potential endogeneity, we use fixed
effect regression, two-stage least squares using instrumental variables. The
results show that there is a negative and significant relationship between
frequency of board meetings and R&D investment strategy, with a greater
significance among Anglo American countries than among Continental European
countries. The rationale for this is that the legal and accounting systems in
the Anglo American countries have greater protection through greater emphasis
on compliance and disclosure and therefore allowing for less risk-taking. Future research could
investigate R&D investment strategy using different arrangement, conducting
face-to-face meetings with firm’s directors and shareholders. This study
extends, as well as contributes to the extant CG literature by offering new
evidence on the effect of frequency of board meetings on R&D investment
strategy between two different traditions. The findings will help regulators
and policy makers in the OECD countries in evaluating the adequacy of the
current CG reforms to prevent management misconduct and scandals.