{"title":"Interim CEO and Corporate Long-term Investment: Evidence from an Emerging Market","authors":"Fei Wu, Jing Yu, Yujie Zhao, Donghua Zhou","doi":"10.2139/ssrn.3104287","DOIUrl":null,"url":null,"abstract":"Building on the short-term nature of interim CEO contracts, this paper examines the effect of interim CEO appointment on corporate long-term investment measured by a firm’s R&D spending. We find robust evidence that the corporate R&D investment level is significantly lower during the interim CEO appointment period. The negative association between R&D investments and the interim CEO appointment is most pronounced when interim CEOs exhibit a myopic tendency. The primary findings disappear in the subsample of state-owned companies, highlighting the bright side of state ownership in ameliorating managerial myopia. Finally, we document that appointing an interim CEO is costly for shareholders in the short run as well as the long run.","PeriodicalId":440695,"journal":{"name":"Corporate Governance: Actors & Players eJournal","volume":"119 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2020-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Corporate Governance: Actors & Players eJournal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.3104287","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
Building on the short-term nature of interim CEO contracts, this paper examines the effect of interim CEO appointment on corporate long-term investment measured by a firm’s R&D spending. We find robust evidence that the corporate R&D investment level is significantly lower during the interim CEO appointment period. The negative association between R&D investments and the interim CEO appointment is most pronounced when interim CEOs exhibit a myopic tendency. The primary findings disappear in the subsample of state-owned companies, highlighting the bright side of state ownership in ameliorating managerial myopia. Finally, we document that appointing an interim CEO is costly for shareholders in the short run as well as the long run.
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