Pandej ChintrakarnPornsit JirapornSameh SakrSang Mook LeeMahidol UniversityPennsylvania State UniversityKing Abdulaziz University2018-12-112019-03-142018-12-112019-03-142016-05-01Finance Research Letters. Vol.17, (2016), 285-289154461232-s2.0-84964678931https://repository.li.mahidol.ac.th/handle/20.500.14594/43605© 2016. We explore the effect of co-opted directors on R&D investments. Co-opted directors are those appointed after the incumbent CEO assumes office. Because a co-opted board represents a weakened governance mechanism that diminishes the probability of executive removal, managers are less likely to be removed and are more motivated to make long-term investments. Our evidence shows that board co-option leads to significantly higher R&D investments. To draw a causal inference, we execute a quasi-natural experiment using an exogenous regulatory shock from the Sarbanes-Oxley Act (SOX). Our results reveal that the effect of board co-option on R&D is more likely causal.Mahidol UniversityEconomics, Econometrics and FinanceArticleSCOPUS10.1016/j.frl.2016.03.025