Agency costs and innovation some empirical evidence

Published

Journal Article

This paper examines the empirical relation between corporate ownership structure and innovation. We test the hypothesis that diffusely-held firms are less innovative than firms with either a high concentration of management ownership or a significant equity block held by an outside investor. Overall, the evidence indicates that diffusely-held firms are less innovative along the dimensions we examine: patent activity, growth by acquisition versus internal development, and timing of long-term investment spending. These results are consistent with the conjecture that concentrated ownership and shareholder monitoring are effective at alleviating the high agency and contracting costs associated with innovation. © 1995.

Full Text

Duke Authors

Cited Authors

  • Francis, J; Smith, A

Published Date

  • January 1, 1995

Published In

Volume / Issue

  • 19 / 2-3

Start / End Page

  • 383 - 409

International Standard Serial Number (ISSN)

  • 0165-4101

Digital Object Identifier (DOI)

  • 10.1016/0165-4101(94)00389-M

Citation Source

  • Scopus