Zulfiqar M, Zhang R, Khan N, Chen S. Behavior Towards R&D Investment of Family Firms CEOs: The Role of Psychological Attribute.
Psychol Res Behav Manag 2021;
14:595-620. [PMID:
34079397 PMCID:
PMC8167369 DOI:
10.2147/prbm.s306443]
[Citation(s) in RCA: 4] [Impact Index Per Article: 1.3] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 02/18/2021] [Accepted: 04/28/2021] [Indexed: 11/23/2022] Open
Abstract
Introduction
This study aims to explore the effects of the behavior of chief executive officers (CEOs) within family firms on investment in research and development (R&D). We also investigate the effect of CEOs' psychological attributes of overconfidence on R&D investment and the moderating effect between the types of CEOs and R&D investment.
Methods
We obtained data on Chinese A-share firms from China Stock Exchange and Accounting Research from 2010 to 2018 for analysis. Then, we used the ordinary least squares model for regression results; moreover, the Tobit regression, GMM and firm fixed effect model are applied to check the robustness of the results.
Results
Family CEOs with actual control rights are more open to R&D investment, whereas those without actual control rights exhibit negative behavior. The study found that non-family CEOs exhibit insignificant results and negative predicted signs toward R&D investment. Moreover, the results show that overconfident CEOs are more inclined to amplify innovation. Furthermore, results on the moderating effects of CEO psychological attribute of overconfidence indicate that the CEO overconfidence mitigates the negative relationship between family CEOs with actual control rights and R&D investment. However, no moderating effect is found between family CEOs without actual control and R&D investment. The CEO psychological attribute behavior is positive between non-family CEOs and R&D investment.
Discussion
This novel study explores the behavioral effect of different types of family firm CEOs on R&D investment. This study will assist corporate board members to make more informed decisions about retaining (or bringing back) family CEOs (with or without actual control rights) or hiring non-family CEOs.
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