Title

Executive Compensation and Horizon Incentives: an Empirical Investigation

Publication Type

Presentation

Publication Date

2-2012

Abstract

This paper investigates the hypothesis that CEOs in their final years of office manage discretionary investment expenditures to improve short-term earnings performance. We examine the behavior of R & D expenditures for a sample of firms in industries that have significant ongoing R & D activities. The results suggest that CEOs spend less on R & D during their final years in office. However, we find the reductions in R & D expenditures are mitigated through CEO stock ownership. There is no evidence that the reduced R & D expenditures are associated with either poor firm performance or reductions in investment expenditures that are capitalized for accounting purposes.

Discipline

Business

Publication

Arizona State University Sonoran Winter Finance Conference

Identifier

10.1016/0167-7187(91)90058-S

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