The effects of board and ownership structure on corporate R & D strategy: a Malaysian-based evidence / Roslida Ramlee

This study is adapted from a study conducted by Baysinger et.al.(1991) on selected
American companies. The purpose of this study is to analyze the relationship and
examine the factors that are expected to influence a firms' corporate R & D strategy,
namely board composition and firm's ownership structure. For board composition, this
study is find out whether inside or outside directors influence the R & D spending. Firm
ownership structure is also examined to see whether all substantial shareholders,
individual shareholders or institutional shareholders influence the R & D spending.
A sample of 40 companies of various industries, listed on the Kuala Lumpur Stock
Exchange (KLSE) Main Board and Second Board were investigated. The Pearson
Product Moment Correlation and Multiple Linear Regression analysis are used to
analyze the data obtained from the annual reports of the respective companies and KLSE
Handbook for the years 1990-1999. The overall result of this study indicates that there is
no significant relationship that exists between the board composition and firm's
ownership structure on corporate R & D spending of a company. The overall implication
of the result indicates that more than 90% of corporate R & D decisions are influenced
by other factors unexplained in this study. The findings at 95% confidence level
indicated that all null hypotheses cannot be accepted.
Regardless of other insignificant results obtained, it is hoped that this study will be a
Malaysian-based evidence to support the study on the relationship between board
composition and ownership structure on corporate R & D spending.