The Effect of R&D on Firm Performance of Venture Companies on KOSDAQ Listed Venture Business

This study analyzed the effects of R&D cost on corporate performance of the companies on KOSDAQ market venture business division. Our results are as follows. First, both R&D cost and R&D intensity of KOSDAQ listed venture companies had significant negative effects on corporate performance. The reason why research and development costs of KOSDAQ market venture companies show negative relationship is that they often give up short-term profitability while focusing on R&D as a characteristic of venture company. Therefore, due to the nature of R&D intensive industry, the degree of R&D costs on sales would be expected to affect long-term performance. Second, the ownership is significantly positive to the corporate performance. Unlike previous studies, KOSDAQ companies often have a professional founder working on the management front, which seems to be due to less agent problems, which supports the consensus hypothesis. Third, the leverage and the sales growth have negative and postive effects on the company performance, respectively. These results can be interpreted as the increasing cost or investment on R&D deteriorates the profitability of the company, but the sales control the level of R&D expenditure and contribute to the profitability of the company