Ownership concentration and R&D investment: the moderating role of stock options

Abstract

PurposeThis study aims to elaborate on how firms manage research and development (R&D) activities by examining the relationship between ownership concentration and corporate R&D investment, as well as the moderating role of stock options in this relationship.Design/methodology/approachThe study sample comprised 354 Chinese listed firms from 2011 to 2019, and the Tobit model and the system GMM test are used to check robustness.FindingsThe results reveal that ownership concentration and R&D investment have an inverted U-shaped relationship. In the presence of stock options, this inverted U-shaped relationship is significantly weaker.Originality/valueThe results have important managerial implications for firms that aim to grant stock options and improve the impact of ownership concentration on R&D investment strategies.