Does CEO inside debt promote corporate innovation?

Lee, Gemma

doi:10.1016/j.frl.2019.101362

Cited by 11 publications

(10 citation statements)

References 24 publications

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“…We include return on assets ( ROA ) measured as net income divided by total assets to control firms’ profitability following Howell (2018). We also include operating cash flow ( OCF ) and cash holding ratio ( CHR ) to control the growth opportunities following (Amore et al, 2013; Lee, 2020; Wu & Tang, 2016). Finally, we include state ownership ( SOE ) measured as the percentage shares held by the state following Wang and Kafouros (2009).…”

Section: Methodsmentioning

confidence: 99%

“…We use all controls variables as the matching criteria in PSM because these firm characteristics (e.g., firm age, leverage, OCF, etc.) can also impact the innovation output (Amore et al, 2013; David & O'Brien, 2006; Howell, 2018; Lee, 2020; Wu & Tang, 2016). We manually select the matched control firms and then rerun our baseline DID regression (Equation 1).…”

Section: Robustness Testsmentioning

confidence: 99%

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Do new CEOs really care about innovation?

Ahmad

Farag

Wang

2023

Euro Fin Management

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This study asks whether new chief executive officers (CEOs) care about innovation postturnover. Using a large sample of Chinese listed firms between 2008 and 2019, our identification strategy relies on the exogenous variation in CEO turnovers. Our difference‐in‐difference estimates indicate that new CEOs improve R&D efficiency and generate more and higher quality patents. We further show that this positive effect is more pronounced when CEOs have longer career horizons and overseas experience. Overall, our findings indicate that CEO turnover represents an effective mechanism for fostering innovation and new CEOs indeed care about innovation. Our results could benefit several groups of stakeholders with respect to CEO selection process.

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Section: Methodsmentioning

confidence: 99%

Section: Robustness Testsmentioning

confidence: 99%

Do new CEOs really care about innovation?

Ahmad

Farag

Wang

2023

Euro Fin Management

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“…In contrast, other studies, such as Sheikh (2012), report that equity-based incentive compensation offered to CEOs promotes corporate innovation. Lee (2020) documents a positive relationship between CEO inside debt and innovation, although a high balance of inside debt compared to equity incentives affects innovation adversely. As discussed above, the findings on the relation between CEO equity compensation and innovation is inconclusive.…”

Section: Formal Corporate Governance Mechanisms and Innovationmentioning

confidence: 99%

Financial reporting and corporate innovation: a review of the international literature

Huang

Habib

Sun

et al. 2021

Accounting & Finance

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We synthesise the empirical studies on innovation in the accounting, finance, and corporate governance disciplines using Bushman and Smith's corporate transparency framework as our theoretical lens. The review presents competing findings on the association between financial reporting and innovation. Most of the reviewed studies fail to address the critical question of how the financial reporting system affects the interactions among financial development, corporate governance and innovation. We suggest future research, ranging from enriching the theoretical perspectives to incorporating the future of innovation research in the COVID-19 environment.

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“…Second, inside debt encourages managers to invest more in value increasing innovations. Lee (2019) documents a positive association between inside debt and firm innovation measured by number of patents and citations. More innovation generally results in higher future cash flows and increases long run profitability and survival of firms.…”

Section: Ceo Inside Debt and Corporate Social Responsibilitymentioning

confidence: 99%

“…Since CSR is associated with lower risk, inside debt may encourage higher investment in CSR. Second, inside debt motivates managers to innovate (Lee, 2019), which indirectly increases long run profitability and survival of firms. Higher profitability provides more internally generated resources and is expected to be positively related to CSR.…”

Section: Introductionmentioning

confidence: 99%

CEO inside debt and corporate social responsibility

Sheikh

2020

IJMF

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PurposeThe purpose of this paper is to empirically examine the relation between incentives from CEO inside debt (deferred compensation and pension benefits) and corporate social responsibility (CSR).Design/methodology/approachInstrumental variable (IV-GMM) regressions are used to estimate the relation between CEO inside debt and CSR.FindingsThe results of this paper indicate that CEOs with large inside debt tend to invest more in CSR. Analysis of CSR strengths and concerns supports this finding and shows that CEO inside debt is significantly positively (negatively) associated with CSR strengths (concerns). Further tests indicate that CEO inside debt exerts a positive and significant effect on all five dimensions of social performance (diversity, community, product, employee relations and environment).Research limitations/implicationsThe results of this study are based on US corporations. Future research should investigate if these results hold for firms in other countries in order to better our understanding of the relation between CEO inside debt and CSR.Practical implicationsCEOs use CSR as a risk management strategy to reduce corporate risk in order to protect the value of their inside debt.Social implicationsThe results in this paper provide a practical tool to boards of corporations to increase investment in CSR. The results suggest that boards can encourage CEOs to invest in CSR by increasing incentives from inside debt.Originality/valueThis study contributes to the literature that examines the relation between inside debt and CSR by showing that CEO inside debt exerts a positive impact on CSR.

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Does CEO inside debt promote corporate innovation?

Cited by 11 publications

References 24 publications

Do new CEOs really care about innovation?

Do new CEOs really care about innovation?

Financial reporting and corporate innovation: a review of the international literature

CEO inside debt and corporate social responsibility

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