CORPORATE OWNERSHIP STRUCTURE AND INNOVATION IN CANADA

This study examines the link between ownership structures and R&D activities in Canada. Our main hypothesis is that highly concentrated ownership structures or the presence of controlling minority shareholders negatively affects R&D intensity of Canadian manufacturing firms. We observe a negative relationship between the concentration of voting rights in firms endowed with a controlling minority structure (CMS) and the outcome of R&D activities. Furthermore, we show that the level of separation between the voting and cash flow rights held by controlling shareholders has a positive effect on R&D intensity but a negative effect on R&D outcome. These results may suggest that CMS shareholders' incentives regarding investments in R&D are not oriented towards innovative improvement but rather towards obtaining private gains.