CEO Inside Debt and Innovation

49 Pages Posted: 24 Mar 2021

See all articles by Ha Nguyen

Ha Nguyen

University of Auckland, Business School, Department of Accounting and Finance

Helen Lu

University of Auckland Business School; University of Auckland - Department of Accounting and Finance

Alastair Marsden

University of Auckland Business School

Date Written: February 17, 2021

Abstract

This study examines the effect of CEO inside debt compensation on firm innovation. CEO inside debt compensation comprises deferred compensation and pension benefits. We find that CEO pension benefits negatively and significantly impact the number of patent applications in the following year and the number of patents and citations over a three-year time horizon. CEO pension benefits are also significantly and negatively associated with future innovation efficiency, which is measured by the firm’s research quotient (Knott, 2008). The negative association between CEO inside debt compensation and the firm’s future innovation is robust to endogeneity concerns.

Keywords: CEO compensation, Inside Debt, Patent, Citation, Research Quotient

JEL Classification: G32, O31, O32

Suggested Citation

Nguyen, Ha and Lu, Helen and Marsden, Alastair D.E., CEO Inside Debt and Innovation (February 17, 2021). Available at SSRN: https://ssrn.com/abstract=3787220 or http://dx.doi.org/10.2139/ssrn.3787220

Ha Nguyen (Contact Author)

University of Auckland, Business School, Department of Accounting and Finance ( email )

Private Bag 92019
Auckland
New Zealand

Helen Lu

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

HOME PAGE: http://www.business.auckland.ac.nz/people/hlu079

University of Auckland - Department of Accounting and Finance ( email )

Private Bag 92019
Auckland 1001
New Zealand

Alastair D.E. Marsden

University of Auckland Business School ( email )

Private Bag 92019
Room: C208
Auckland
New Zealand
64 9 373 7999 (Phone)
64 9 373 7406 (Fax)

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