Abstract
PurposeThis study aims to examine whether and how the power of a chief executive officer (CEO) relates to firm-level research and development (R&D) investment.Design/methodology/approachThe authors use clustered standard errors ordinary least squares regression using a large sample of US firms from 1994 to 2017.FindingsThe authors find a significant negative relation between CEO power and R&D investment, suggesting that firms with more powerful CEOs are less likely to invest in R&D activities. Besides, the study finds that this significant negative relation is largely driven by firms with weaker corporate governance.Originality/valueThis study contributes to the finance literature on the impact and consequences of having powerful CEOs and the financial accounting literature on the determinants of R&D expenditures.
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