The effect of capital market pressures on the association between R&D spending and CEO option compensation

被引：14

作者：

Cao J. ^{[1
]}

Laksmana I. ^{[2
]}

机构：

[1] School of Accounting, Barry Kaye College of Business, Florida Atlantic University, Boca Raton, FL 33431

[2] Department of Accounting, College of Business Administration, Kent State University, Kent, OH 44242-0001

来源：

Review of Quantitative Finance and Accounting | 2010年 / 34卷 / 2期

关键词：

CEO option compensation; Earnings benchmarks; R&D expenditures;

D O I：

10.1007/s11156-009-0146-7

中图分类号：

学科分类号：

摘要：

We examine the effect of capital market pressures for meeting earnings benchmarks on the relationship between R&D spending and CEO option compensation. We consider a particular scenario when firms face small earnings declines but could opportunistically reduce R&D spending to increase reported earnings. We find that firms with income reporting concerns punish their CEOs with lower option compensation when R&D spending increases but reported earnings decreases. Further, for firms with income reporting concerns, we find that the penalty for increasing R&D is greater when the firms frequently miss quarterly earnings benchmarks in the year. Overall, our findings suggest that the adverse consequence on CEO options encourages short-run compensation-motivated actions to eliminate or postpone R&D projects with positive net present values. © Springer Science+Business Media, LLC 2009.

引用

页码：273 / 300

页数：27

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