Board structure and corporate R&D intensity: evidence from Forbes global 2000

Purpose: This study aims to examine the impact of board structure on risk-taking measured by research and development (R&D) intensity in OECD countries. Design/methodology/approach: The study uses a panel data of 200 companies on Forbes global 2000 over the 2010-2014 period. It uses the ordinary least square multiple regression analysis techniques to examine the hypotheses. Findings: The results show that the frequency of board meetings and board size are significantly and negatively related to risk-taking measured by R&D intensity, 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. Research limitations/implications: Future research could investigate risk-taking using different arrangements, conducting face-to-face meetings with the firm’s directors and shareholders. Practical implications: The results suggest that better-governed firms at the firm- or national-level have a high expectancy of less risk-taking. These results offer regulators a resilient incentive to pursue corporate governance (CG) and disclosure reforms officially and mutually with national-level governance. Thus, these results show the monitoring and legitimacy benefits of governance, resulting in less risk-taking. Finally, the findings offer investors the opportunity to build specific expectations about risk-taking behaviour in terms of R&D intensity in OECD countries. Originality/value: This study extends and contributes to the extant CG literature, by offering new evidence on the effect of board structure on risk-taking. The findings will help policymakers in different countries in estimating the sufficiency of the available CG reforms to prevent management mishandle and disgrace.