CEO power and R&D investment

Christine Naaman and Li Sun

Accounting Research Journal, 2021, vol. 35, issue 2, 160-177

Abstract: Purpose - This study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment. Design/methodology/approach - The authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017. Findings - The authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance. Originality/value - This study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.

Keywords: Innovation; R&D investment; Corporate governance; CEO power; CEO characteristics (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-07-2020-0195

DOI: 10.1108/ARJ-07-2020-0195

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