Affiliation:
1. Professor, School of Business Administration, Myongji University
2. Assistant Professor of Accounting, College of Business & Economics, Chung-Ang University
Abstract
Since CEO pension is unsecured and unfunded liabilities of the firm, it induces CEOs to have long-term incentives towards minimizing their firms’ default risk. Motivated by the unique characteristics of CEO pension, this study investigates the impact of CEO pension on the value relevance of R&D expenditures. Using Tobin’s Q ratio to measure firm value, the empirical results show that CEO pension intensifies the relation between R&D expenditures and Tobin’s Q ratio. The results remain robust in two-stage least square and propensity score matching regression analysis to address the endogeneity issues in the relation between CEO pension and the value relevance of R&D expenditures. In addition, the regression results with ROA and F-score as the alternative dependent variables also confirm that CEO pension intensifies the relation between R&D expenditures and firm value.
Publisher
LLC CPC Business Perspectives
Subject
Strategy and Management,Business and International Management,General Business, Management and Accounting,Information Systems and Management,Law,Sociology and Political Science,Public Administration