This study examines whether a firm’s business strategy and life cycle will influence managers’ myopic behaviour in R&D investment. Using a sample of listed Taiwanese firms who have high incentives to meet earnings benchmarks from 1996 to 2010, we find that firms adopting the prospector strategy are more likely to cut R&D expenditures. In addition, we find that firms in the growth stage exhibit lower likelihood of cutting R&D expenditures to meet earnings targets. These results suggest that prospector firms are concerned more about the cost of investor undervaluation due to R&D expensing than about the future benefits that could be derived from current R&D spending. Further analysis indicates that such myopic behaviour tends to exist in firms with poor governance.
JEL Codes: M41
Total Reviews: 0
After completion purchase and payment you will get an email with download link of book. You can download this book within 24 hours. Be remember you can't download this book after 24 hours.