Management Accounting Section Midyear Meeting

Understanding Corporate Governance in Business Groups: Lobbying by Subsidiary CEO for R&D Investment

• In Event: Break and Research Exhibition 2
  In Paper Session: Room 2

Abstract

This study sheds light on control and corporate governance issues between parent firms and subsidiaries in business groups by examining the extent to which subsidiary CEOs’ network power influence their ability to lobby for greater subsidiary R&D investment. Our results highlight that subsidiary CEOs of business groups exert their network power to lobby for approval from parent firms for greater subsidiary R&D investment. Further, our findings suggest that effective subsidiary corporate governance can mitigate the positive influence of subsidiary CEOs’ network power on their ability to lobby for more subsidiary R&D investment. Finally, we find that excessive R&D investment secured by subsidiary CEOs result in lower subsidiary’s firm performance.

Authors

• Jun Shao, Shanghai Lixin University of accounting and financ

• Anne Wu, National Chengchi University

• Wai Fong Boh, Nanyang Technological University

• Cheng Jen Huang, National Chengchi University