Fear to lose? An analysis of CEO successors’ decision-making regarding R&D intensity based on behavioral agency theory

Xin Liu ()
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Xin Liu: Hebei University of Technology

Asian Business & Management, 2023, vol. 22, issue 1, No 16, 403-430

Abstract: Abstract This study builds on insights from behavioral agency theory and upper echelon perspectives to examine the impact of CEO succession on firms’ post-succession R&D intensity. Drawing on behavioral agency theory, we analyze the CEO successor’s decision on R&D intensity after taking office when faced with risks and payoffs brought by R&D investments. The moderating effects of performance on succession and CEO successors’ age on the relationship between CEO succession and R&D intensity are also examined. By empirically analyzing a sample of Chinese listed companies during 2010–2016, we find that CEO successors tend to decline firm R&D intensity after taking office. Moreover, higher firm performance upon succession enhances CEO successors’ motivation to decline the R&D intensity post-succession; with the increase in CEO age, CEO successors’ motivation to decline firm R&D intensity weakens.

Keywords: CEO successor; R&D intensity; Financial performance; CEO age; Behavioral agency theory (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41291-021-00172-0

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