The Impact of Corporate Governance Practices on R&D Intensities of Firms: An Econometric Study on French Largest Companies

Abstract

The paper considers the impact of multiple shareholder-oriented governance practices on R&D decisions. Based on a sample of 5,713 firms belonging to 110 large French listed business groups, our results substantiate the idea that shareholder-oriented governance practices and a lower position in a control pyramid are better for R&D investment. The introduction of any additional shareholder oriented practice is found to result in more R&D. We show however that this Anglo-Americanization of the French corporate governance system is only partial. We provide evidence of the co-existence of an old French system of corporate governance with a hybrid model of corporate governance. The lack of concrete results on complementarity among shareholder oriented governance practices casts doubt on the stability of this hybrid model in the French context.

Keywords: corporate governance, R&D, innovation, provisions

JEL Classification: O31, O32, G31, G32