THE EFFECT OF CORPORATE GOVERNANCE ON R&D INVESTMENT WITH FINANCIAL SLACK AS A MEDIATING VARIABLE
Main Article Content
Abstract
The aim of this research is to examine the influence of corporate governance structures, namely independent commissioners and institutional ownership, on research and development (R&D) investment mediated by financial slack in pharmaceutical companies listed on the Indonesian Sharia Stock Index (ISSI) on the Indonesia Stock Exchange during the period (2018-2022). Data were extracted from annual reports and financial statements, with a total of 7 pharmaceutical companies listed on the ISSI serving as the sample. The analytical technique employed was the multiple regression test using panel data, conducted using Eviews. The research findings indicate that financial slack has a positive and significant effect on R&D investment. Independent commissioners have no significant effect on R&D investment. Institutional ownership has a significant effect on R&D investment. Then independent commissioners affect R&D investment through financial slack as a mediating variable, and institutional ownership has no effect on R&D investment through financial slack as a mediating variable. The conclusion is that the greater the level of financial slack, the higher the allocation of funds in R&D investment. Therefore, it is important to choose independent commissioners who are competent according to the company’s sector. On the other hand, institusional ownership is able to increase control over management because it has intensive knowledge, experience, and more networks.
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THE EFFECT OF CORPORATE GOVERNANCE ON R&D INVESTMENT WITH FINANCIAL SLACK AS A MEDIATING VARIABLE. (2023). I-Finance: A Research Journal on Islamic Finance, 9(2), 234-251. https://doi.org/10.19109/ifinance.v9i2.20465
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I-Finance by http://jurnal.radenfatah.ac.id/index.php/I-Finance is lincensed under a Creative Commons Attribution-ShareAlike 4.0 International Lisence.
How to Cite
THE EFFECT OF CORPORATE GOVERNANCE ON R&D INVESTMENT WITH FINANCIAL SLACK AS A MEDIATING VARIABLE. (2023). I-Finance: A Research Journal on Islamic Finance, 9(2), 234-251. https://doi.org/10.19109/ifinance.v9i2.20465
References
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Bursa Efek Indonesia. (2023, October 24). Indeks Saham Syariah. Bursa Efek Indonesia. https://www.idx.co.id/id/idx-syariah/indeks-saham-syariah
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Dong, J., & Gou, Y. (2010). Corporate governance structure, managerial discretion, and the R&D investment in China. International Review of Economics & Finance, 19(2), 180–188.
Dutta, S., Lanvin, B., Leon, L. R., & Wunsch-Vincent, S. (2023). Global Innovation Index 2023 Innovation in the face of uncertainty.
Kemendagri. (2020, January 31). Penyebab pengembangan riset di Indonesia tertinggal jauh dari negara lain. Kemendagri. https://litbang.kemendagri.go.id/website/penyebab-pengembangan-riset-di-indonesia-tertinggal-jauh-dari-negara-lain/
Kim, H., Kim, H., & Lee, P. M. (2008). Ownership structure and the relationship between financial slack and R&D investments: Evidence from Korean firms. Organization Science, 19(3), 404–418.
Lee, M. (2015). Impact of corporate governance on research and development investment in the pharmaceutical industry in South Korea. Osong Public Health and Research Perspectives, 6(4), 249–255.
Lee, S. (2012). Financial determinants of corporate R&D investment in Korea. Asian Economic Journal, 26(2), 119–135.
Lewis, T. C. (2013). A Review and Analysis of the Effects of Financial Slack on Firm Innovation Recommended Citation Lewis, Tony Croix, “A Review and Analysis of the Effects of Financial Slack on Firm Innovation” (2013). Theses and Dissertations.
Mukhtaruddin, M., Saftiana, Y., & Dwikatama, P. A. (2018). Firm’s characteristics, corporate governance quality and corporate social responsibility disclosure. Sriwijaya International Journal of Dynamic Economics and Business, 2(3), 193–212.
Nugraha, B. (2022). Pengembangan uji statistik: Implementasi metode regresi linier berganda dengan pertimbangan uji asumsi klasik. Pradina Pustaka.
Ong, H., & Sari. (2020, November 19). State Owned Enterprise (BUMN) as Catalysts for Research and Innovation. Lexology. https://doi.org/10.34667/tind.48220
Septiandendi, R., & Ramadhan, A. F. (2019). Pengaruh Corporate Governance Terhadap Investasi Research & Development Pada Perusahaan Farmasi Di Indonesia. Universitas Diponegoro.
Septiandendi, R., & Ramadhan, A. F. (2021). Impact of corporate governance on research & development investment in the pharmaceutical industry in Indonesia. Indicators: Journal of Economic and Business, 3(2), 109–118.
Shaikh, I. A., O’Brien, J. P., & Peters, L. (2018). Inside directors and the underinvestment of financial slack towards R&D-intensity in high-technology firms. Journal of Business Research, 82, 192–201.
Syuhada, K. F., & Prabowo, T. J. W. (2022). Corporate Governance Dan Pengaruhnya Terhadap Investasi Research & Development (Studi Empiris Pada Perusahaan Industri Farmasi Yang Terdaftar Di Bursa Efek Indonesia Periode 2016-2021). Diponegoro Journal of Accounting, 11(4).
Utomo, U. A. C., & Septiani, A. (2017). Pengaruh Corporate Governance Terhadap Investasi Research & Development pada Perusahaan Farmasi di Indonesia. Diponegoro Journal of Accounting, 6(3), 199–206.
Widi, G. P., & Barry, H. (2020). Faktor-faktor yang Mempengaruhi Intensitas R&D pada Perusahaan Manufaktur yang Terdaftar di BEI 2015-2018. Seminar Nasional Riset Terapan Administrasi Bisnis Dan MICE, 9(1).
Zhang, K., Wang, J. J., Sun, Y., & Hossain, S. (2021). Financial slack, institutional shareholding and enterprise innovation investment: evidence from China. Accounting & Finance, 61(2), 3235–3259.
Zulkarnain, Z., & Nurdianti, S. (2022). Pengaruh Kepemilikan Institusional, Kepemilikan Bank, dan Kepemilikan Pendiri Terhadap Intensitas R&D. Cakrawala Repositori IMWI, 5(1), 43–60.
Bolton, P., Wang, N., & Yang, J. (2019). Investment under uncertainty with financial constraints. Journal of Economic Theory, 184, 104912.
Bursa Efek Indonesia. (2023, October 24). Indeks Saham Syariah. Bursa Efek Indonesia. https://www.idx.co.id/id/idx-syariah/indeks-saham-syariah
Chandra, B., & Marsaulina, N. (2019). Analisis Faktor-faktor yang Mempengaruhi Intensitas R&D pada Perusahaan yang terdaftar di Bursa Efek Indonesia tahun 2013-2017. Rekaman: Riset Ekonomi Bidang Akuntansi Dan Manajemen, 3(1), 67–73.
Dong, J., & Gou, Y. (2010). Corporate governance structure, managerial discretion, and the R&D investment in China. International Review of Economics & Finance, 19(2), 180–188.
Dutta, S., Lanvin, B., Leon, L. R., & Wunsch-Vincent, S. (2023). Global Innovation Index 2023 Innovation in the face of uncertainty.
Kemendagri. (2020, January 31). Penyebab pengembangan riset di Indonesia tertinggal jauh dari negara lain. Kemendagri. https://litbang.kemendagri.go.id/website/penyebab-pengembangan-riset-di-indonesia-tertinggal-jauh-dari-negara-lain/
Kim, H., Kim, H., & Lee, P. M. (2008). Ownership structure and the relationship between financial slack and R&D investments: Evidence from Korean firms. Organization Science, 19(3), 404–418.
Lee, M. (2015). Impact of corporate governance on research and development investment in the pharmaceutical industry in South Korea. Osong Public Health and Research Perspectives, 6(4), 249–255.
Lee, S. (2012). Financial determinants of corporate R&D investment in Korea. Asian Economic Journal, 26(2), 119–135.
Lewis, T. C. (2013). A Review and Analysis of the Effects of Financial Slack on Firm Innovation Recommended Citation Lewis, Tony Croix, “A Review and Analysis of the Effects of Financial Slack on Firm Innovation” (2013). Theses and Dissertations.
Mukhtaruddin, M., Saftiana, Y., & Dwikatama, P. A. (2018). Firm’s characteristics, corporate governance quality and corporate social responsibility disclosure. Sriwijaya International Journal of Dynamic Economics and Business, 2(3), 193–212.
Nugraha, B. (2022). Pengembangan uji statistik: Implementasi metode regresi linier berganda dengan pertimbangan uji asumsi klasik. Pradina Pustaka.
Ong, H., & Sari. (2020, November 19). State Owned Enterprise (BUMN) as Catalysts for Research and Innovation. Lexology. https://doi.org/10.34667/tind.48220
Septiandendi, R., & Ramadhan, A. F. (2019). Pengaruh Corporate Governance Terhadap Investasi Research & Development Pada Perusahaan Farmasi Di Indonesia. Universitas Diponegoro.
Septiandendi, R., & Ramadhan, A. F. (2021). Impact of corporate governance on research & development investment in the pharmaceutical industry in Indonesia. Indicators: Journal of Economic and Business, 3(2), 109–118.
Shaikh, I. A., O’Brien, J. P., & Peters, L. (2018). Inside directors and the underinvestment of financial slack towards R&D-intensity in high-technology firms. Journal of Business Research, 82, 192–201.
Syuhada, K. F., & Prabowo, T. J. W. (2022). Corporate Governance Dan Pengaruhnya Terhadap Investasi Research & Development (Studi Empiris Pada Perusahaan Industri Farmasi Yang Terdaftar Di Bursa Efek Indonesia Periode 2016-2021). Diponegoro Journal of Accounting, 11(4).
Utomo, U. A. C., & Septiani, A. (2017). Pengaruh Corporate Governance Terhadap Investasi Research & Development pada Perusahaan Farmasi di Indonesia. Diponegoro Journal of Accounting, 6(3), 199–206.
Widi, G. P., & Barry, H. (2020). Faktor-faktor yang Mempengaruhi Intensitas R&D pada Perusahaan Manufaktur yang Terdaftar di BEI 2015-2018. Seminar Nasional Riset Terapan Administrasi Bisnis Dan MICE, 9(1).
Zhang, K., Wang, J. J., Sun, Y., & Hossain, S. (2021). Financial slack, institutional shareholding and enterprise innovation investment: evidence from China. Accounting & Finance, 61(2), 3235–3259.
Zulkarnain, Z., & Nurdianti, S. (2022). Pengaruh Kepemilikan Institusional, Kepemilikan Bank, dan Kepemilikan Pendiri Terhadap Intensitas R&D. Cakrawala Repositori IMWI, 5(1), 43–60.