The Interrelationships Between Information Technology Spending, CEO Equity Incentives and Firm Value
42 Pages Posted: 15 Aug 2009 Last revised: 26 Jul 2014
Date Written: February 2014
We examine the interrelationships between information technology spending, CEO equity compensation incentives and firm value. We present two related pieces of evidence. First, we find that CEO equity incentives are associated with IT spending suggesting that CEOs with higher incentives are more likely to invest in a risky asset such as IT. Second, we find that the association between IT spending and business value is stronger for firms that grant CEOs higher equity incentives. Our study contributes to the CEO compensation and IT governance literatures.
Keywords: IT Investments, CEO Compensation, Shielding, IT Value
JEL Classification: M41
Suggested Citation: Suggested Citation