The moderating effects of chief executive officer (CEO) duality on the relationship between research and development (R and D) spending and firm performance

Abstract

This study aims to examine a moderating effect of chief executive officer (CEO) duality, possessing both roles of the principle and the agent in a firm, to some extent, on the relationship between research and development (R and D) spending and firm performance. To test whether the moderating effect is significant, three-stage hierarchical regression analysis method applied. Using a Chow test further determines CEO duality’s effect varies in industries. Statistical data analysis provided diversified interesting outcomes. Two subgroup samples, the semiconductor electronics industry and the other electronics industry, had significantly supported research hypothesis based on agency theory, while the peripheral products industry was just insignificantly consistent with the view of agency theory. A Chow test of differences in R2 between the semiconductor electronics industry and other two industries, namely peripheral products industry and other electronics industry, did not achieve a statistical significance at the 5% level, indicating that it was unable to accept the anticipated hypothesis. These results implied that though there was a negative effect of interaction term between CEO duality and R and D spending on firm performance, the interactive influence did not significantly alter any difference among industries. Key words: Hierarchical regression, chief executive officer (CEO) duality, research and development (R and D) spending, Chow test, agency theory, resource dependent theory.