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The effects of R%D expenditure and earnings management on stock options: evidence from market competition

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  • Yi-Mien Lin
  • Tzu-Wen Lee

Abstract

This paper examines the effects of R&D expenditures and earnings management on executive stock options and the effects of the competitiveness of a firm in the industry on R&D and executive stock options under controlling for managerial incentive and corporate governance. The findings are that as R&D of a firm increases, managers are more likely to manipulate earnings to enhance the firm value, thus creating a higher value for stock options. Being more competitive in the industry motivates the firm to broaden business territory, thus it will invest more in R&D to obtain a larger market share. The stronger the competitiveness of a firm and the better the performance are, the more stock options that will be granted to managers.

Suggested Citation

  • Yi-Mien Lin & Tzu-Wen Lee, 2021. "The effects of R%D expenditure and earnings management on stock options: evidence from market competition," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 17(1/2), pages 148-172.
    • Handle: RePEc:ids:ijaape:v:17:y:2021:i:1/2:p:148-172
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