Market value of R&D, patents, and CEO characteristics
Wang, Lipeng Zhang, Mengyu
Wang, Lipeng
Zhang, Mengyu
Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2025
Journal
Financial Innovation
Book
Publication Volume
11
Publication Issue
8
Publication Begin page
Publication End page
Publication Number of pages
Collections
Abstract
The contribution of knowledge capital to firm value has increased significantly, from 25% in the 1970s to 45% in the 2010s (Belo et al. in Decomposing firm value J Financ Econ 143:619–639, 2022). However, what influences firms’ ability to maximize the effect of knowledge capital on firm value? Drawing on insights from upper echelons, agency, and behavioral agency theories, we show that CEO characteristics are crucial in enabling firms to take advantage of knowledge stock. We empirically demonstrate that short-term CEO compensation structures are detrimental to a firm’s ability to take advantage of its knowledge stock. We further show that CEO power enhances knowledge stock and R&D intensity. Our study provides direct empirical evidence of the importance of CEO compensation structure and corporate governance in understanding firm value in a knowledge economy.
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Keywords
Knowledge Capital