Threshold Effect Analysis of Board Size and Corporate R&D Investment Behavior

Base on panel data of manufacturing and high-tech industry companies who discourse R&D expenditure in financial statements from 2004 to 2008, this paper studies the relationship between board sizes and R&D expending behavior by using the threshold model that Hansen proposed in 1999. The results show that only when the company sizes exceeds a critical value, there will be a "increasing first, decreasing later" non-linear relationship between board sizes and corporate R&D expenditure. So we deduce that corporate governance effects of board sizes present the "low level trap" phenomenon. The results also show that percentage of independent directors on the Board play no effects to improve corporate R&D investment decisions.