The impact of CEO compensation and CEO horizon on a firm's discretionary research and development expenditures

Agency costs are said to arise as a result of the separation of ownership from control inherent in the corporate form of ownership. One such agency problem concerns the potential variance between the time horizons of principal shareholders and agent managers. Agency theory suggests that these costs can be alleviated or controlled through performance-based Chief Executive Officer (CEO) contracting. However, components of a CEO's compensation contract can exacerbate or mitigate agency-related problems (Antle and Smith, 1985). According to the horizon hypothesis, a self-serving CEO reduces discretionary research and development (R&D) expenditures to increase earnings and earnings-based bonus compensation. Agency theorists contend that a CEO's market-based compensation component can mitigate horizon problems. This study seeks to determine whether there is a relationship between CEO earnings- and market-based compensation components and R&D expenditures in the largest United States industrial firms from 1987 to 1993.^ Consistent with the horizon hypothesis, results provide evidence of a negative and statistically significant relationship between CEO cash compensation (i.e., salary and bonus) and the firm's R&D expenditures. Consistent with the expectations of agency theory, results provide evidence of a positive and statistically significant relationship between market-based CEO compensation and R&D.^ Further results of this study provide evidence of a positive and statistically significant relationship between CEO tenure and the firm's R&D expenditures. Although there is a negative relationship between CEO age and the firm's R&D, it was not statistically significant at the 0.5 level. ^

The impact of pre -training interventions on cognitive, skill, and affective learning outcomes: A meta -analytic examination of four decades of research

Technological advancements and the ever-evolving demands of a global marketplace may have changed the way in which training is designed, implemented, and even managed, but the ultimate goal of organizational training programs remains the same: to facilitate learning of a knowledge, skill, or other outcome that will yield improvement in employee performance on the job and within the organization (Colquitt, LePine, & Noe, 2000; Tannenbaum & Yukl, 1992). Studies of organizational training have suggested medium to large effect sizes for the impact of training on employee learning (e.g., Arthur, Bennett, Edens, & Bell, 2003; Burke & Day, 1986). However, learning may be differentially affected by such factors as the (1) level and type of preparation provided prior to training, (2) targeted learning outcome, (3) training methods employed, and (4) content and goals of training (e.g., Baldwin & Ford, 1988). A variety of pre-training interventions have been identified as having the potential to enhance learning from training and practice (Cannon-Bowers, Rhodenizer, Salas, & Bowers, 1998). Numerous individual studies have been conducted examining the impact of one or more of these pre-training interventions on learning. ^ I conducted a meta-analytic examination of the effect of these pre-training interventions on cognitive, skill, and affective learning. Results compiled from 359 independent studies (total N = 37,038) reveal consistent positive effects for the role of pre-training interventions in enhancing learning. In most cases, the provision of a pre-training intervention explained approximately 5–10% of the variance in learning, and in some cases, explained up to 40–50% of variance in learning. Overall attentional advice and meta-cognitive strategies (as compared with advance organizers, goal orientation, and preparatory information) seem to result in the most consistent learning gains. Discussion focuses on the most beneficial match between an intervention and the learning outcome of interest, the most effective format of these interventions, and the most appropriate circumstances under which these interventions should be utilized. Also highlighted are the implications of these results for practice, as well as propositions for important avenues for future research. ^