Measuring R&D Curtailment Among Short-Horizon CEOs

34 Pages Posted: 29 Sep 2011

See all articles by Richard A. Cazier

Richard A. Cazier

University of Texas at El Paso - Department of Accounting

Date Written: September 28, 2011


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.

Keywords: Horizon Problem, R&D Spending, Empirical Design

JEL Classification: G34, M41, J33

Suggested Citation

Cazier, Richard A., Measuring R&D Curtailment Among Short-Horizon CEOs (September 28, 2011). Journal of Corporate Finance, Vol. 17, No. 3, 2011. Available at SSRN:

Richard A. Cazier (Contact Author)

University of Texas at El Paso - Department of Accounting ( email )

500 W University Ave
El Paso, TX 79902
United States
915-747-7755 (Phone)

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