Motivating corporate innovation by option-based compensation - evidence on the U.S. board of directors

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School of Business | Bachelor's thesis
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Date

2017

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Mcode

Degree programme

Rahoitus

Language

en

Pages

21

Series

Abstract

I examine the relation between corporate innovation and option-based compensation issued for board of directors with particular focus on the non-executive director options. My findings support the prior research by providing new evidence on the positive effect of non-executive and executive director stock option compensation on motivating corporate innovation. Consistent with earlier literature, I find that unexercised options with lower current value and longer expiration time act as better incentives for risk-taking and investing in innovation for non-executive directors. However, exercising the non-executive options and the length of expiration time affects the innovation less than suggested by prior research.

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Thesis advisor

Onal, Bunyamin

Keywords

option, compensation, board, innovation, patents

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