CEO compensation and earnings smoothing through R&D
研究发现CEO股票期权带来的风险承担激励能显著减少通过研发支出进行的盈余平滑，尤其在强制期权费用化后效果更强，但对新上任或经验不足的CEO及亏损严重的企业效果较弱。
We examine the effect of executive compensation on earnings smoothing through research and development expenditures (R&D smoothing). We find that CEO risk-taking incentives derived from stock options significantly reduce R&D smoothing. This effect becomes more pronounced following the adoption of Financial Accounting Standard (FAS) 123(R), which mandated the expensing of stock options and curtailed their use for financial reporting purposes. Moreover, these risk-taking incentives are less effective in mitigating R&D smoothing among newly appointed or inexperienced CEOs, as well as among firms experiencing extreme losses. Overall, our findings underscore a positive role for CEOs’ option-based compensation in shaping managerial R&D investment decisions: by incentivizing risk-taking, such compensation discourages R&D smoothing and better aligns managerial actions with shareholders’ long-term interests.