CEO & CFO Education and R&D Investment in Indonesia

Abstract

This study examines how the research and development (R&D) investments of listed companies in Indonesia are influenced by the educational characteristics of their CEOs and CFOs. This study uses 368 observations from 150 listed companies on the Indonesian Stock Exchange for the period 2010 to 2015. We find that CEOs with higher educational levels invest more in research and development. This is consistent with more education instilling a longer-term perspective on corporate managers. We also find that CFOs with accounting certifications invest less in R&D, consistent with the risk-adverse nature of the accounting profession. For companies and shareholders, our findings indicate the need for a greater understanding of the factors associated with R&D investments in Indonesia and other developing markets. Particularly, factors related to the background experience of CEOs and other executives, whose characteristics can have a real impact on the R&D investment decisions of firms. Our results show that the education of CEOs and CFOs is associated with their investment decisions in research and development. Thus, different education backgrounds create a bias for or against R&D investment in Indonesian firms.

The chief financial officer (CFO) profile and R&D investment intensity: evidence from listed European companies

“…This is because upper echelons theory suggests that organizational outcomes can be considered as the reflection of the values and cognitive bases related to the individual characteristics of top executives (Meyer and Goes, 1998;Barker III and Mueller, 2002). In this regard, studies based on the upper echelons perspective state that the educational background of a manager is an important factor affecting the firm's R&D expenditure (Barker and Mueller, 2002;Harymawan et al, 2020) since a higher educational level leads to improve cognitive ability and opens the mind of an individual to the opportunity for innovation (Naranjo-Gil et al, 2009). Moreover, research asserts that gender is a base on which to understand the managerial orientation in the decision-making process (Adams and Ferreia, 2009;Ruiz-Jim enez et al, 2016;Torchia et al, 2011), even in the case of R&D investment (Almor et al, 2019).…”

Ex-auditor executives and investment efficiency: evidence from Indonesia

“…Prior studies use this theoretical basis to see how the characteristics of top management to their decisions. The example is a study showing the differences in the level of education of CEOs and CFOs on the level of R&D investment in companies (Harymawan et al. , 2020).…”

“…Prior study also documented how the educational characteristics of CEOs and CFOs relate to R&D investment in companies in Indonesia. The results show that CEOs with higher levels of education tend to invest more in R&D (Harymawan et al. , 2020).…”

The policy dynamics of Indonesia's science, technology, and innovation system (STI system): Current state of research and literature construction

“…In addition, research in the area of science, technology and innovation has been initiated to study areas such as: science, technology and innovation policies (Aminullah, 2020;Lukman Hakim, 2015;Harymawan et al, 2020;Hoetman & Santa, 2014;Prihatina, 2010;Purwanggono et al, 2017;Putera & Jannah, 2012), regional innovation policy (Lorita, 2015;Maulana & Putryanda, 2017;Putera, Arifin, et al, 2014), R&D funding/budget (Akbar Adhiutama et al, 2018;Dobrzanski & Bobowski, 2020), R&D incentives (Firmansyah, 2010), R&D management (Hermawati et al, 2013;Sukur & Soesanto, 2014), government R&D institutions (Dimyati et al, 2020;Kardoyo et al, 2015;Nugroho, 2013), R&D institutions in the regions (Sampurna & Irwandi, 2017;Susanto & Priyambodo, 2014;Syekh, 2019;Wirasuta, 2019), valuation and performance of R&D institutions' intellectual property-patents (Aiman, 2014;Anggraeni, 2016;Herjanto, 2010;Imaniyati, 2015;Payumo et al, 2014).This data presentation is in line with the results of mapping, conducted through VOSviewer (Putera & Gustina, 2021) (see Fig. 6) regarding science, technology and innovation systems over the last 10 years.…”