Career Concerns of Young and Old CEOS: Their Effect on R&D Spending in the Software Industry

Authors

Zheng Cheng, University of Wisconsin - Milwaukee
David B. Wangrow, Marquette UniversityFollow
Vincent L. Barker III, University of Kansas

Document Type

Article

Publication Date

6-2024

Publisher

Elsevier

Source Publication

Long Range Planning

Source ISSN

0024-6301

Original Item ID

DOI: 10.1016/j.lrp.2024.102438

Abstract

The age-related career concerns of Chief Executive Officers (CEOs) have generated considerable research attention over the past 25 years. Despite theory that both very young and very old CEOs may have career concerns that encourage pursuit of short-term profitability at the expense of long-term investment, the vast majority of past studies have examined whether firms with CEOs who are nearing retirement undertake less long-term investment than other firms. Using 31 years of panel data for U.S.-based public firms making branded software products (SIC 7372), we hypothesize and find that the relationship between CEO age and R&D spending is curvilinear with firms managed by either younger or older CEOs spending less on R&D as compared to their middle-aged counterparts (i.e., an inverted U-shaped relationship). These findings are consistent with early career horizon theory and suggest that the career concerns of both young and old CEOs need to be considered by (1) researchers trying to understand the effects of CEOs on strategic decision making and (2) boards of directors attempting to focus CEOs on longer-term investment opportunities.

Comments

Accepted version. Long Range Planning, Vol. 57, No. 3 (June 2024). DOI. © 2024 Elsevier. Used with permission

Recommended Citation

Cheng, Zheng; Wangrow, David B.; and Barker, Vincent L. III, "Career Concerns of Young and Old CEOS: Their Effect on R&D Spending in the Software Industry" (2024). Management Faculty Research and Publications. 397.
https://epublications.marquette.edu/mgmt_fac/397