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KMID : 1120220150060040249
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Osong Public Health and Research Perspectives
2015 Volume.6 No. 4 p.249 ~ p.255
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Impact of Corporate Governance on Research and Development Investment in the Pharmaceutical Industry in South Korea
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Lee Mun-Jae
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Abstract
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Objectives: The purpose of this study is to analyze the influence of the corporate governance of pharmaceutical companies on research and development (R&D) investment.
Methods: The period of the empirical analysis is from 2000 to 2012. Financial statements and comments in general, and internal transactions were extracted from TS-2000 of the Korea Listed Company Association. Sample firms were those that belong to the medical substance and drug manufacturing industries. Ultimately, 786 firm-year data of 81 firms were included in the sample (unbalanced panel data).
Results: The shareholding ratio of major shareholders and foreigners turned out to have a statistically significant influence on R&D investment (p < 0.05). No statistical significance was found in the shareholding ratio of institutional investors and the ratio of outside directors.
Conclusion: The higher the shareholding ratio of the major shareholders, the greater the R&D investment. There will be a need to establish (or switch to) a holding company structure. Holding companies can directly manage R&D in fields with high initial risks, and they can diversify these risks. The larger the number of foreign investors, the greater the R&D investment, indicating that foreigners directly or indirectly impose pressure on a manager to make R&D investments that bring long-term benefits.
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KEYWORD
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corporate governance, ownership structure, panel study, pharmaceutical industry, research and development investment
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