The effect of related party transactions on R&D investment: Evidence from Korea
This study aims to investigate the relationship between related party transactions and a firm’s investment in research and development (R&D), as well as the moderating effect of a firm’s financial health on such a relationship. The study applies a fixed-effect panel regression model with a s...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2022-11-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17240/IMFI_2022_04_Shin.pdf |
| _version_ | 1797947513412517888 |
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| author | Ilhang Shin Hansol Lee |
| author_facet | Ilhang Shin Hansol Lee |
| author_sort | Ilhang Shin |
| collection | DOAJ |
| description | This study aims to investigate the relationship between related party transactions and a firm’s investment in research and development (R&D), as well as the moderating effect of a firm’s financial health on such a relationship. The study applies a fixed-effect panel regression model with a sample of 13,619 Korean listed firms for the period from 2001 to 2020. The results indicate that related party transactions significantly and positively influence a firm’s R&D investment at the 1% level for the study period. Specifically, when related party transactions are divided into operating and non-operating, the results show that only non-operating related party transactions significantly and positively affect firms’ investment in R&D. Moreover, findings report that the effect of related party transactions is stronger for firms with financial distress, lower cash holdings, and in the high-tech industry. The results imply that related party transactions promote a firm’s R&D investment, which is one of the primary business investments that create a firm’s competitive advantage and value. Moreover, the results propose that related party transactions should be carefully evaluated when accessing the firm’s investment behavior. |
| first_indexed | 2024-04-10T21:29:12Z |
| format | Article |
| id | doaj.art-228a3fbf75694012981a4adede991401 |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-04-10T21:29:12Z |
| publishDate | 2022-11-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-228a3fbf75694012981a4adede9914012023-01-19T14:22:26ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582022-11-011949911210.21511/imfi.19(4).2022.0817240The effect of related party transactions on R&D investment: Evidence from KoreaIlhang Shin0https://orcid.org/0000-0003-1221-4519Hansol Lee1https://orcid.org/0000-0001-6776-410XPh.D., Associate Professor, Gachon UniversityPh.D., Visiting Professor, Yonsei UniversityThis study aims to investigate the relationship between related party transactions and a firm’s investment in research and development (R&D), as well as the moderating effect of a firm’s financial health on such a relationship. The study applies a fixed-effect panel regression model with a sample of 13,619 Korean listed firms for the period from 2001 to 2020. The results indicate that related party transactions significantly and positively influence a firm’s R&D investment at the 1% level for the study period. Specifically, when related party transactions are divided into operating and non-operating, the results show that only non-operating related party transactions significantly and positively affect firms’ investment in R&D. Moreover, findings report that the effect of related party transactions is stronger for firms with financial distress, lower cash holdings, and in the high-tech industry. The results imply that related party transactions promote a firm’s R&D investment, which is one of the primary business investments that create a firm’s competitive advantage and value. Moreover, the results propose that related party transactions should be carefully evaluated when accessing the firm’s investment behavior.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17240/IMFI_2022_04_Shin.pdfinternal capital marketsR&D activitiesR&D investmentsrelated party transactionsresearch and development |
| spellingShingle | Ilhang Shin Hansol Lee The effect of related party transactions on R&D investment: Evidence from Korea Investment Management & Financial Innovations internal capital markets R&D activities R&D investments related party transactions research and development |
| title | The effect of related party transactions on R&D investment: Evidence from Korea |
| title_full | The effect of related party transactions on R&D investment: Evidence from Korea |
| title_fullStr | The effect of related party transactions on R&D investment: Evidence from Korea |
| title_full_unstemmed | The effect of related party transactions on R&D investment: Evidence from Korea |
| title_short | The effect of related party transactions on R&D investment: Evidence from Korea |
| title_sort | effect of related party transactions on r d investment evidence from korea |
| topic | internal capital markets R&D activities R&D investments related party transactions research and development |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17240/IMFI_2022_04_Shin.pdf |
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