Title

Executive Compensation and Horizon Incentives: an Empirical Investigation

Publication Type

Presentation

Publication Date

8-2012

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

European Finance Association (EFA) Annual Meetings

Identifier

10.1016/0167-7187(91)90058-S

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