Corporate Research and Development Expenditures in Saudi Arabia: Does CEOs’ Power Matter?

Author:

Hamza Fadhila1ORCID,Gamra Souha Ben2

Affiliation:

1. Department Accounting, College of Business and Administration, Princess Nourah Bint Abdulrahman University, Riyadh, Saudi Arabia

2. Department Accounting, The Higher Institute of Computer Sciences and Management, Kairouan University, Kairouan, Tunisia

Abstract

This article investigates the impact of the chief executive officer’s (CEO’s) power on research and development (R&D) expenditures in Saudi Arabia. Mainly, it studies the influence of CEOs’ power (ownership power, structural power and expert power) on their risk-taking behaviour. Empirically, we used a panel model with data from a sample of 60 Saudi firms listed from 2016 to 2019. We developed five models to examine both the direct and moderating effects of the power indicators on R&D expenditures using OLS regression. Findings demonstrate that Saudi firms promoting insider CEOs with short tenure and no ownership are more innovative. These results have great implications for researchers and investors to understand what kind of power they should consider when selecting leaders to carry out innovation plans and thus ensure long-term firm growth.

Publisher

SAGE Publications

Subject

Strategy and Management,Business and International Management

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