The Effect of Firm Internationalization on R&D Information Quality: The Moderating Effect of CEO Overconfidence

초록

This study investigates the association between firm internationalization and R&D information quality. Extant studies related to a firm’s R&D activities imply that R&D information quality is significantly associated with corporate governance structure. Given that firm internationalization induces firms to apply governance structures that enhance monitoring of managers and information-processing ability, this study hypothesizes that firm internationalization would positively affect R&D information quality. Furthermore, considering the significant effect of CEO overconfidence on a firm’s investment decisions as well as on its economic consequences, this study examines the moderating effect of CEO overconfidence on the association between firm internationalization and R&D information quality. Using data on Korean listed firms for the period 2016-2021, this study finds that firm internationalization positively affects a firm’s R&D information quality. Moreover, the result reveals that CEO overconfidence weakens the positive association between firm internationalization and R&D information quality. This study provides practical implications for market participants, including investors and regulators, that R&D information quality is higher for firms with a high degree of internationalization.

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