| Summary: | 碩士 === 國立彰化師範大學 === 會計學系 === 105 === This paper is to examine whether CEO pay-performance sensitivities and inside debt affect firm innovation. According to agency theory, managers may damage shareholders’ wealth for maximizing their self-interest. Previous literatures have document that CEO compensation scheme is the way for fixing this agency problem. However, different CEO compensation schemes would lead CEOs to have different risk preferences. We try to argue that high CEO pay-performance sensitivity to option would motive CEO to take high risky projects, saying in-house R&D. In other way, granting CEO more inside-debt would motive CEO to avoid risky projects, in terms of in-house R&D. By investigating S&P 500 firms from 2006-2015, we find that that if firms have high CEO pay-performance sensitivity to option, they are willing to take downside risk from the innovation activities. Furthermore, firms with high CEOs’ inside debt have less risky projects, in terms of external patent acquisition. This paper tries to contribute the literatures to provide competent evidences for the influences of debt-like and equity-like compensations on innovation activities.
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