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Employee stock ownership and corporate R&D expenditures: evidence from Taiwan's information-technology industry

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Abstract

This study investigates how employee stock ownership affects corporate R&D expenditures for information-technology firms listed on the Taiwan Stock Exchange during 1996–2001. The empirical results indicate a positive association between implementing employee stock ownership and R&D expenditures. The evidence thus supports the argument that employee stock ownership could help alleviate agency conflicts between employees and shareholders, and reduce agency costs, in turn enabling firms to make sizable R&D expenditures.

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Notes

  1. Global Competitiveness Report 2005–2006 (http://www.weforum.org).

  2. Industrial Development and Investment Center of Ministry of Economic Affairs, R.O.C. reported that until 2005 Taiwan is the second biggest computer-hardware producer.

  3. Tsao, Robert, 3/29/1999, Competitive advantages of Taiwan's IC industry, Economic Times.

  4. Shih, Stan, 1/8/2002, The significance and value of employee stock ownership, Economic Times.

  5. Distribution of Taiwan listed IT firms by Employee Bonus over the Sample Period 1996–2001.

    figure a

  6. Alternatively, the employee stock ownership can be shown in a form of number of shares. A cross-section of different firms might have different market price per share; therefore, it is tough for comparison across different firms using number of shares.

  7. The exchange rate between US dollars and NT dollars over the sample period 1996–2001:.

    figure b

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Authors and Affiliations

  1. Department of Business Administration, National Taiwan University of Science and Technology, 43, Section 4, KeeLung Road, Taipei, Taiwan, Republic of China

    Hsiang-Lan Chen & Yen-Sheng Huang

  2. Department of Business Administration, St. John’s University, 499, Section 4, Tam King Road, Tamsui, Taipei, Taiwan, Republic of China

    Hsiang-Lan Chen

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  1. Hsiang-Lan Chen
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  2. Yen-Sheng Huang
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Correspondence to Yen-Sheng Huang.

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Chen, HL., Huang, YS. Employee stock ownership and corporate R&D expenditures: evidence from Taiwan's information-technology industry. Asia Pacific J Manage 23, 369–384 (2006). https://doi.org/10.1007/s10490-006-9005-4

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