Abstract
Firms can curb opportunistic managerial R&D investing behavior by increasing the sensitivity of CEO compensation to R&D investment. Using a sample of firms in Taiwan's R&D-intensive industries, this study examines whether family ownership moderates the sensitivity of CEO compensation to R&D investment. The results show that the sensitivity of CEO compensation to R&D investment is higher for family firms than for nonfamily firms, and that CEO compensation in family firms is based more heavily on the firm's level of R&D investment than on performance. In addition, R&D investment by family firms leads to greater investment efficiency, firm value, and growth rates than similar investment by nonfamily firms. These findings suggest that, in family firms, a compensation structure based on R&D investment enhances firm value.
| Original language | English |
|---|---|
| Pages (from-to) | 599-606 |
| Number of pages | 8 |
| Journal | Journal of Business Research |
| Volume | 68 |
| Issue number | 3 |
| DOIs | |
| State | Published - 1 Mar 2015 |
Keywords
- CEO compensation
- Family firms
- Investment efficiency
- Myopic R&D investment behavior
- R&D investment