CEO cultural heritage and R&D expenditures

Ha, Yu Sung and Kang, Jangkoo and Kwon, Kyung Yoon (2024) CEO cultural heritage and R&D expenditures. International Journal of Finance and Economics. ISSN 1099-1158 (https://doi.org/10.1002/ijfe.2970)

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Abstract

This paper examines how the cultural heritage of chief executive officers (CEOs) in US firms affects research and development (R&D) investment. Utilizing economically significant and unexpected R&D-increasing events, we examine how six dimensions of CEO cultural heritage—individualism, power distance, masculinity, uncertainty avoidance, long-term orientation, and indulgence—influence it. We find that CEOs with a high–power distance heritage are more likely to increase R&D. We confirm that this effect of CEO power distance is robust to other cultural effects, the model specification, and endogeneity issues. We conjecture that CEOs with a high–power distance heritage are more likely to increase R&D expenditures because they use their power to pursue personal objectives. Consistent with our hypothesis, we find that R&D increases made by CEOs with a high–power distance culture generate significantly lower benefits in the future, reflecting the inefficiency of these R&D investment decisions.

  • Item type:Article
    ID code:88609
    Dates:
    Date
    Event
    27 March 2024
    Published
    27 March 2024
    Published Online
    11 March 2024
    Accepted
    5 June 2023
    Submitted
    Notes:Copyright © 2024 Owner. This is the peer reviewed version of the following article: Ha, YS, Kang, J & Kwon, KY 2024, 'CEO cultural heritage and R&D expenditures', International Journal of Finance and Economics, which has been published in final form at https://doi.org/10.1002/ijfe.2970. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
    Subjects:Social Sciences > Commerce > Business
    Social Sciences > Economic Theory > Methodology > Mathematical economics. Quantitative methods
    Social Sciences > Economic Theory
    Social Sciences > Finance
    Social Sciences > Commerce > Accounting
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:03 Apr 2024 15:27
    Last modified:25 Apr 2024 14:49
    URI:https://strathprints.strath.ac.uk/id/eprint/88609
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