The influence of CEO equity incentives on licensing |
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Authors: | Vincent OConnell Jong-Ho Lee Don OSullivan |
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Institution: | 1. Department of Accounting and MIS, Gulf University for Science and Technology, Mubarak Al-Abdullah, Kuwait;2. Cork University Business School, University College Cork, Ireland;3. Korea University Business School, Anam-Dong, Seongbuk-Gu, Seoul 136-701, South Korea;4. Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, Victoria 3053, Australia |
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Abstract: | In a study of life science firms, we find that, in accordance with predictions drawn from agency theory and behavioral agency theory, CEO stock ownership is negatively associated with licensing while CEO stock options are positively associated with licensing. Furthermore, by combining theoretical insights from the capabilities literature with both agency theory and behavioral agency theory, we predict that a key measure of capabilities in the licensing context—a firm's alliance experience—significantly influences the ways in which CEO equity incentives impact licensing. More specifically, we find that, in accordance with our theoretical predictions, alliance experience positively (negatively) moderates the relationship between CEO stock ownership (CEO stock options) and licensing. Our study contributes to the wider literature on the determinants of licensing by examining whether licensing is sensitive to CEO equity incentives. We also extend the capabilities literature on licensing by examining the contrasting influences of a firm's alliance experience on the relationship between CEO equity incentives and licensing. Our findings also inform behavioral agency-based research on the effects of equity incentives by highlighting the usefulness of a capabilities perspective in augmenting our understanding of the behavioral role of CEO equity incentives. |
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Keywords: | Licensing Alliance experience CEO equity incentives Life sciences |
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