Do Cash-Flow Performance Metrics in CEOs’ Compensation Contracts Enhance Firm Innovation?

IF 16.4 1区 化学 Q1 CHEMISTRY, MULTIDISCIPLINARY
Qi Dong, Yiting Cao, Victoria Dickinson, Hongrui Feng
{"title":"Do Cash-Flow Performance Metrics in CEOs’ Compensation Contracts Enhance Firm Innovation?","authors":"Qi Dong, Yiting Cao, Victoria Dickinson, Hongrui Feng","doi":"10.2308/jmar-2022-083","DOIUrl":null,"url":null,"abstract":"\n Building on prior research showing a positive link between internally generated cash flows and innovation output, we hypothesize and find that the inclusion of cash-flow performance metrics in CEOs’ compensation contracts positively impacts firm innovation. Our findings are consistent with the theory that cash-flow metrics incentivize CEOs to make prudent investment decisions, thereby addressing both the overinvestment and the underinvestment challenges for firm innovation. As a result, firms utilizing cash-flow metrics exhibit lower innovation input and higher innovation output compared to firms not employing such metrics. Furthermore, our research indicates that the incentive effect of cash-flow metrics on firm innovation is more pronounced when cash flows convey unique information not reflected in earnings and when CEOs have longer expected employment horizons. This study underscores the effectiveness of cash-flow metrics in motivating management to promote firm innovation.\n Data Availability: Subscription-based data are obtained from Wharton Research Data Services; public data are obtained from public sources specified in the paper.\n JEL Classifications: D81, G30, J33, M52.","PeriodicalId":1,"journal":{"name":"Accounts of Chemical Research","volume":null,"pages":null},"PeriodicalIF":16.4000,"publicationDate":"2024-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounts of Chemical Research","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2308/jmar-2022-083","RegionNum":1,"RegionCategory":"化学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 0

Abstract

Building on prior research showing a positive link between internally generated cash flows and innovation output, we hypothesize and find that the inclusion of cash-flow performance metrics in CEOs’ compensation contracts positively impacts firm innovation. Our findings are consistent with the theory that cash-flow metrics incentivize CEOs to make prudent investment decisions, thereby addressing both the overinvestment and the underinvestment challenges for firm innovation. As a result, firms utilizing cash-flow metrics exhibit lower innovation input and higher innovation output compared to firms not employing such metrics. Furthermore, our research indicates that the incentive effect of cash-flow metrics on firm innovation is more pronounced when cash flows convey unique information not reflected in earnings and when CEOs have longer expected employment horizons. This study underscores the effectiveness of cash-flow metrics in motivating management to promote firm innovation. Data Availability: Subscription-based data are obtained from Wharton Research Data Services; public data are obtained from public sources specified in the paper. JEL Classifications: D81, G30, J33, M52.
首席执行官薪酬合同中的现金流绩效指标能促进公司创新吗?
先前的研究表明,内部产生的现金流与创新产出之间存在正向联系,在此基础上,我们假设并发现,将现金流绩效指标纳入首席执行官的薪酬合同会对企业创新产生积极影响。我们的研究结果与以下理论一致:现金流指标激励首席执行官做出审慎的投资决策,从而解决企业创新面临的投资过度和投资不足的难题。因此,与未采用现金流指标的企业相比,采用现金流指标的企业表现出较低的创新投入和较高的创新产出。此外,我们的研究还表明,当现金流传递的独特信息未反映在收益中,且首席执行官的预期就业期限较长时,现金流指标对企业创新的激励作用会更加明显。这项研究强调了现金流指标在激励管理层促进公司创新方面的有效性。数据提供:订阅数据来自沃顿商学院研究数据服务;公共数据来自论文中指定的公共来源。JEL 分类:D81、G30、J33、M52。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
Accounts of Chemical Research
Accounts of Chemical Research 化学-化学综合
CiteScore
31.40
自引率
1.10%
发文量
312
审稿时长
2 months
期刊介绍: Accounts of Chemical Research presents short, concise and critical articles offering easy-to-read overviews of basic research and applications in all areas of chemistry and biochemistry. These short reviews focus on research from the author’s own laboratory and are designed to teach the reader about a research project. In addition, Accounts of Chemical Research publishes commentaries that give an informed opinion on a current research problem. Special Issues online are devoted to a single topic of unusual activity and significance. Accounts of Chemical Research replaces the traditional article abstract with an article "Conspectus." These entries synopsize the research affording the reader a closer look at the content and significance of an article. Through this provision of a more detailed description of the article contents, the Conspectus enhances the article's discoverability by search engines and the exposure for the research.
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信