Abstract
This study explores the link between R&D investment variability and CEO turnover across the eras surrounding the Sarbanes-Oxley Act (SOX). It posits that, after SOX, R&D expenditure hikes not matched by sales growth may trigger more frequent CEO turnover, driven by a perceived increase in risk. Data from 1996 to 2010 reveal that, before SOX, R&D increases positively correlate with CEO job stability. In contrast, after SOX, a rise in R&D spending is linked to a higher rate of CEO turnover, particularly involuntary dismissals. The study further identifies that post-SOX, the negative impact of R&D spikes on CEO turnover is significantly mitigated when such investment aligns with sales growth. The findings suggest a significant influence of R&D investments on CEO turnover, underscoring the need for boards to deliberate the consequences of R&D spending and CEO turnover to better align shareholders and CEO interests.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 350-363 |
| Number of pages | 14 |
| Journal | Journal of Corporate Accounting and Finance |
| Volume | 35 |
| Issue number | 3 |
| DOIs | |
| State | Published - Jul 2024 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 9 Industry, Innovation, and Infrastructure
All Science Journal Classification (ASJC) codes
- Accounting
- General Economics, Econometrics and Finance
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