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Performance Measures and Executive Compensation: Does R&D Investment Matter?


March 27th, 2013

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The intensity of R&D increases the complexity of executives’ jobs; therefore, the marginal return on ability should be higher in R&D intensive firms. In particular, being knowledgeable in the field of technology is helpful in determining long-term strategy, competing with competitors, managing the R&D labor force, and protecting intangible assets. If CEO ability should increases with R&D intensity, how can we best design incentive contracts?

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