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Article

The Influence of Independent Directors, Insider Ownership and Scientific Connections on Risky R&D Investments: Evidence from Emerging Markets

Journal of Corporate Finance Research. 2016. No. 3. P. 5-23.
Stepanova A. N., Anna Tereshchenko.

R&D projects in pharmaceutical industry are extremely risky and bring benefits in long-run period. Self-interested managers try to avoid risk and underinvest in R&D. In this paper we study the effect of independent directors, insider ownership and scientific connections on R&D investments. Independent directors and insider ownership can mitigate agency problem by additional monitoring and convergence of interests. Scientific collaborations promote technological development and increase R&D. The research reveals the difference of the effects in emerging and developed market.