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The Influence of Outside Directors' Stock-Option Compensation on Firms' R&D


  • Yuval Deutsch


Using a sample of S&P 1500 firms between 1997 and 2000, this paper examines the effects of outside directors' stock-option compensation on firms' R&D intensity. Results suggest that including stock options in outside directors' compensation enhances firms' R&D. Moreover, stock-option compensation moderates the relationship between board composition and R&D intensity. These results suggest that outside directors' compensation schemes do matter. The results also highlight the need to re-evaluate previous findings that addressed the effects of board composition on both firms' performance and strategic decisions. Copyright (c) 2007 The Author; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Yuval Deutsch, 2007. "The Influence of Outside Directors' Stock-Option Compensation on Firms' R&D," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 816-827, September.
  • Handle: RePEc:bla:corgov:v:15:y:2007:i:5:p:816-827

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    Cited by:

    1. Zona, Fabio, 2016. "Agency models in different stages of CEO tenure: The effects of stock options and board independence on R&D investment," Research Policy, Elsevier, vol. 45(2), pages 560-575.
    2. Elizabeth N. K. Lim, 2015. "The role of reference point in CEO restricted stock and its impact on R&D intensity in high-technology firms," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 872-889, June.
    3. Pattarin Adithipyangkul & Tak Yan Leung, 2016. "Large Shareholders and Independent Director Equity Compensation," Australian Accounting Review, CPA Australia, vol. 26(2), pages 208-221, June.

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