CEO Inside Debt and Innovation
49 Pages Posted: 24 Mar 2021
Date Written: February 17, 2021
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: Suggested Citation