CEO power and R&D investment

Abstract

Purpose This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

Ceo Power and Risk-Taking: Intermediate Role of Personality Traits

“…On the other hand, agency conflict implies that CEOs are prone to extract personal benefits at the expenses of shareholders. Effects of these motives on corporate performance are expected, so that companies with powerful CEOs will have lower leverage [46], lower R&D expenses [37], etc. However, as already stated, agency theory, which views CEOs as economic agents, assumes that CEOs are homogenous in power use and, more importantly, ignores heterogeneity in CEOs personality traits.…”

Can digital transformation reduce R&D investment disruption during the top executive transition period?

“…However, studies on the determinants of exploratory and exploitative R&D mainly focus on the output perspective. Literature on R&D input concentrates on the total R&D investment (Naaman & Sun, 2022;Ngo & Stanfield, 2022) accounted for approximately 39.8% of GDP, which suggests that the digital economy has become a key force in supporting the high-quality development of the national economy. Among these, the impact of industrial digitization is particularly significant, accounting for nearly 81.6% of the digital economy and 32.5% of GDP.…”

“…However, studies on the determinants of exploratory and exploitative R&D mainly focus on the output perspective. Literature on R&D input concentrates on the total R&D investment (Naaman & Sun, 2022; Ngo & Stanfield, 2022), and little is known about what influences the allocation of funds at different stages of R&D. R&D output does not fully reflect R&D investment, especially when exploratory R&D faces more risks and uncertainties. Hence, it is necessary to examine exploratory and exploitative R&D from the perspective of input.…”

The impact of CEO age on a firm’s choice of global reporting initiative: moderating role of board social capital

“…The adoption of the GRI reporting framework for CSR reporting is a strategic decision that requires top management team (TMT) concerns. Upper echelons theory argues that TMT’s psychological traits affect organizational decisions, actions and outcomes (Hambrick, 2007; Naaman and Sun, 2021; Safari Gerayli et al , 2021; Salehi et al , 2021). Recent research suggests that chief executive officers (CEOs) differ in their attributes.…”

“…Consequently, these attributes (i.e. experiences, values and psychological traits) impact firms’ strategic decisions (Naaman and Sun, 2021; Safari Gerayli et al , 2021). Although the extant literature has consistently documented that CEOs’ career horizon plays an integral role in corporate strategic decisions and subsequent organizational outcomes (Liu, 2021), surprisingly, the CEO’s age has not been examined in terms of the firm’s GRI adoption choice.…”