Risk or Reward? CEO Option Compensation and Firm Innovation Outcomes

DOI

10.2991/978-94-6463-888-2_54How to use a DOI?

Keywords

CEO Option Incentives; Corporate Innovation; Patent Applications; Risk-taking Behavior; Poisson Regression

Abstract

This study investigates the relationship between Chief Executive Officer (CEO) option incentives and corporate innovation output, with a particular emphasis on performance variations across different contexts. In the intensely competitive contemporary market, enterprise innovation is recognized as a critical driver for sustaining competitive advantage. By analyzing data from U.S. listed companies spanning 1992 to 2021, this research employs a Poisson regression model to empirically assess the correlation between the intensity of option incentives and the frequency of patent applications. The findings reveal a positive correlation between CEO option incentives and corporate innovation output. Such incentives not only increase the number of patent applications but also foster high-quality innovation outcomes. This effect is especially pronounced among male CEOs and firms exhibiting strong profitability. The study provides new insights into the intricate relationship between CEO incentive structures and innovation activities, offering policy implications for optimizing executive compensation frameworks to bolster enterprises’ long-term innovation capacities. It underscores that, in devising incentive mechanisms, firms should account for the personal attributes of CEOs and the financial condition of the enterprise to effectively stimulate innovative vigor. These findings bear significant policy implications for enhancing the sustained innovation capabilities of enterprises and advancing high-quality economic development, while also offering strategic insights for cultivating an innovative nation.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Feiyu Lyu
PY  - 2025
DA  - 2025/12/03
TI  - Risk or Reward? CEO Option Compensation and Firm Innovation Outcomes
BT  - Proceedings of the 2025 7th International Conference on Economic Management and Cultural Industry (ICEMCI 2025)
PB  - Atlantis Press
SP  - 556
EP  - 566
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-888-2_54
DO  - 10.2991/978-94-6463-888-2_54
ID  - Lyu2025
ER  -