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| Author: | Ryan, H. E. Wiggins, R. A. III |
| Title: | The interactions between R&D investment decisions and compensation policy |
| Journal: | Financial Management
2002 : SPRING, VOL. 31:1, p. 5-29 |
| Index terms: | R&D Investment planning Chief executive officers |
| Language: | eng |
| Abstract: | The authors use a system of equations to investigate the endogenous relation between R&D investment and CEO compensation. Growth opportunity is positively related to the use of stock options. Stock options positively affect R&D while restricted stock has a negative influence. These results suggest that CEO compensation should balance incentive alignment and efficient risk sharing with risk-averse managers. Stock options are also found be negatively related that institutional ownership directly influences R&D investment by providing managerial oversight and indirectly by influencing the compensation policy. |
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