| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 1017269 | Journal of Business Research | 2015 | 8 Pages |
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.
