Abstract

We analyze the influence of investors’ legal protection and of ownership structure on corporate expenditures in R&D. We use information from 1,091 firms from 19 countries and find that a more protective legal framework is positively related to corporate investment in R&D. Once the institutional obstacles are removed, financial factors become more effective to promote R&D. Ownership concentration acts as a substitute of legal protection and has a positive impact on R&D in the countries with the worst institutional environment

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