Journal of Corporate Finance Vol. 17 No. 3 2011
Measuring R&D curtailment among short-horizon CEOs
Abstract
I review evidence produced by prior literature on CEO horizon problems and show that prior empirical findings are correlated with the research design employed. I find that evidence of R&D curtailment by CEOs as they approach retirement stems predominantly from cross-sectional correlations between CEO age or tenure and R&D spending. Using a broad sample of CEOs of S&P 1500 firms, I identify two factors that confound the cross-sectional relationship of firm R&D spending on CEO age or tenure which can lead to spurious inferences regarding the CEO horizon problem. I find that tracking R&D spending by the same CEOs over time produces no evidence of R&D curtailment. These results have research design implications for future researchers investigating the impact of shortened CEO career horizons on investment myopia.
- DOI
- 10.1016/j.jcorpfin.2011.02.005
- Volume
- 17
- Issue
- 3
- Pages
- 584-594
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref