کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5089254 | 1375588 | 2013 | 10 صفحه PDF | دانلود رایگان |

When financial market frictions exist, executives may have to decide which investment activities to reduce when internal funds decrease. Expenditures on research and development (R&D) may be particularly vulnerable because of the long-term nature of innovative activity. We find that equity compensation is associated with lower levels of firm R&D expenditures. Rewarding executives to incur more risk has little effect on R&D expenditures, but rewarding executives for higher returns reduces R&D expenditures and makes R&D expenditures more sensitive to financial market frictions. In contrast, cash compensation reduces the sensitivity of R&D expenditures to financial market frictions.
⺠Controls for endogeneity bias caused by serial correlation when explanatory variables are predetermined. ⺠Increasing delta reduces R&D spending and makes R&D more sensitive to financial market frictions. ⺠There is no relationship between vega and R&D. ⺠Cash compensation makes R&D less sensitive to financial market frictions.
Journal: Journal of Banking & Finance - Volume 37, Issue 7, July 2013, Pages 2510-2519