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Corporate governance, innovation investment and firm performance: evidence from Malaysian public listed companies

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Author(s): Norlizan MAT RABI | Abdul Hadi ZULKAFLI | Mohd Hassan CHE HAAT

Journal: Economia : Seria Management
ISSN 1454-0320

Volume: 13;
Issue: 2;
Start page: 225;
Date: 2010;
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Keywords: corporate governance | innovation | performance.

ABSTRACT
Increasing attention is given in monitoring the management team by the shareholders through corporate governance mechanism. This is to ensure that every strategic business decisions maximize shareholders’ wealth. Unlike previous studies which identified a direct relationship between corporate governance mechanism and performance, this study is conducted to examine the moderating impact of the corporate governance mechanism on the relationship between innovation investment proxies by R&D expenditures and firm performance. Our findings concluded that board compensation and frequency of board meeting are considered as important characteristics that would determine the effectiveness of the innovation investment. Thus, in analyzing the innovation investment incurred by the firm, investors should review the corporate governance characteristics as it would determine the effectiveness of the innovation investment in improving firm performance.
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