Characteristics Associated with the Corporate Decision to Adopt Long‐term Performance Plans

Vernon J. Richardson and James F. Waegelein

Journal of Business Finance & Accounting, 2003, vol. 30, issue 3‐4, 621-644

Abstract: This study investigates why firms adopt long‐term performance plans. The results provide evidence that firms that adopt long‐term performance plans have higher risk as measured by Beta, have lower percentages of managerial stockholdings, have higher levels of investment in research and development expenditures two years prior to adoption of a long‐term performance plan, and experience increases in the ratio of debt to total assets in the two year period prior to long‐term performance plan adoption. Also, firms increase their investments in research and development and capital expenditures following adoption of long‐term performance plans.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:30:y:2003:i:3-4:p:621-644

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