Do Effective Boards and Strong Corporate Control Markets Enhance or Depress Market Valuation of R&D?

This study examines whether corporate governance enhances or depresses market valuation of research and development (RD (ii) less anti-takeover provisions (market control mechanism) are also associated with higher R&D valuation, and (iii) effective board governance (market control mechanism) is associated with higher R&D valuation only in the presence of weak market control mechanism (board governance). Our results provide evidence that both internal and external governance mechanisms enhance R&D valuation, but they act as substitutes in doing so.