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korean management review - Vol. 51 , No. 3

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[ Article ]
korean management review - Vol. 51, No. 3, pp. 811-842
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Jun 2022
Received 18 Jan 2022 Revised 19 Apr 2022 Accepted 22 Apr 2022
DOI: https://doi.org/10.17287/kmr.2022.51.3.811
The Effect of CEO and Management Compensation Sensitivity on R&D costs
Hosung Nam ; Cheolkyu Hong
(First Author) Graduate School, Chung-Ang University (andrewnams@gmail.com)
(Corresponding Author) College of Business & Economics, Chung-Ang University (ckhong04@cau.ac.kr)
경영자 보상 민감도가 연구개발비 지출에 미치는 영향

Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study examines the effects of CEO(or Management) compensation sensitivity on R&D costs. Traditionally, R&D costs is used for earnings management. In previous studies, the main factors for R&D costs are analyzed as firm characteristics and industry characteristics. However, since the CEO decides R&D costs at CEO discretion, the key factor in the R&D costs factor is the CEO's motivation. Therefore, this study examines the effect of CEO's compensation sensitivity on R&D costs. As a result of the empirical analysis of this study, CEO's show differences according to the method of R&D costs according to the compensation structure. This directly shows that CEO's actively use R&D costs for their own private interest. This study empirically analyzed that the method of R&D costs differs according to the management compensation structure.


Keywords: R&D costs, CEO Compensation Sensitivity, firm value, Agency theory

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∙ The author Hosung Nam is a doctoral candidate at Chung-Ang University. The main research areas are Managerial Accounting, Public Entities’ Strategy & Operations, Public Innovation, Performance Evaluation, R&D policy.

∙ The author Cheolkyu Hong is a professor of accounting at the College of Business & Economics, Chung-Ang University. He received his Ph.D in Accounting from London School of Economics. The main research areas are Cost Accounting, Managerial Accounting, Performance Management/ Evaluation, ESG Disclosure and Management, Public Entities’ management, Information communication public policy. He is currently serving as the president of the Management Accounting Association of Korea for the development of the management accounting field.