CEO Confidence and Unreported R&D
Confident CEOs are substantially more likely to disclose R&D spending than cautious ones, even though the underlying level of innovation does not differ once reporting choices are accounted for.
Summary
Koh, Reeb and Zhao find that firms led by confident CEOs are 24% more likely to report research and development spending than those led by cautious CEOs, and that regulatory shocks increasing reporting liability reduce underreporting more among cautious-CEO firms. Notably, confident-CEO firms do not actually innovate more once differing disclosure propensities are accounted for. This means investors and boards should be cautious about inferring
Editor's opinion
Narrow CEO-disclosure-behavior finance paper, not a firm-strategy lever.
Key concepts
CEO confidence · R&D disclosure · Managerial traits