Abstract
This paper examines how clawback provisions, as an ex-post penalty scheme, affect corporate innovation intensity and strategies. On the one hand, innovation activities decline after clawback adoptions. On the other hand, clawback adopters tend to conduct fewer exploitative innovations but more exploratory innovations. These results hold for both voluntary clawback adoptions and mandatory clawback adoptions. The results support the capital market pressure hypothesis, which posits that after clawback adoption, managers become more careful about research and development spending and shift to exploratory innovations to meet capital markets’ expectations.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.