The Impact of Separation between Control Rights and Earnings Distribution Rights and the Mandatory Establishment of the Independent Director Mechanism on Investment in Intangible Assets — Oak Academic Publishing
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The Impact of Separation between Control Rights and Earnings Distribution Rights and the Mandatory Establishment of the Independent Director Mechanism on Investment in Intangible Assets
Department of Accounting Information, National Taipei University of Business, Taipei
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Department of Accounting Information, National Taipei University of Business, Taipei
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Department of Accounting Information, National Taipei University of Business, Taipei
1 Department of Accounting Information, National Taipei University of Business, Taipei
2 Department of Accounting Information, National Taipei University of Business, Taipei
3 Department of Accounting Information, National Taipei University of Business, Taipei
In this study, the impact of the degree of separation between control rights and earnings distribution rights on the R&D expenditures, book intangible assets and advertising expenses after the mandatory establishment of the independent director mechanism in listed/OTC companies of Taiwan was explored. Most controlling shareholders increase their shares by means of cross-shareholding or pyramid structure, and participate in the management of the corporate, which makes it difficult for minority shareholders to impact the formulation of corporate policies. Therefore, according to the agency theory, the higher the degree of separation between control rights and earnings distribution rights is, the less the intangible assets the corporate will invest. However, according to the efficient contract theory, owners of corporates may voluntarily hire professional managers and invest in the costs of self-restraint and supervision. The empirical results of this study support the efficient contract theory, that is, the degree of separation between control rights and earnings distribution rights and the number of independent directors have a positive impact on R&D expenditures, book intangible assets and advertising expenses. In addition, the number of independent directors may strengthen the positive impact of the degree of separation between control rights and earnings distribution rights on R&D expenditures, book intangible assets and advertising expenses.
KeywordsSeparation between Control Rights and Earnings Distribution RightsAgency TheoryEfficient Contract TheoryIndependent DirectorIntangible Asset
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