Frequency of Board Meetings and R&D Investment Strategy: Evidence from OECD Countries

Abstract

This study seeks to examine the impact of frequency of board meetings on R&D investment strategy in OECD countries. The study uses a panel data of 200 companies from Anglo American and European countries between 2010 and 2014. The ordinary least square regression is used to examine the relationships. Additionally, to alleviate the concern of potential endogeneity, we use fixed effect regression, two-stage least squares using instrumental variables. The results show that there is a negative and significant relationship between frequency of board meetings and R&D investment strategy, with a greater significance among Anglo American countries than among Continental European countries. The rationale for this is that the legal and accounting systems in the Anglo American countries have greater protection through greater emphasis on compliance and disclosure and therefore allowing for less risk - taking. Future research could investigate R&D investment strategy using different arrangement, conducting face-to-face meetings with firm’s directors and shareholders. This study extends, as well as contributes to the extant CG literature by offering new evidence on the effect of frequency of board meetings on R&D investment strategy between two different traditions. The findings will help regulators and policy makers in the OECD countries in evaluating the adequacy of the current CG reforms to prevent management misconduct and scandals.