Prior studies have examined the relation between product market competition (PMC) and research and development (R&D) investments, while the impact of executive risk incentives on this relation remains unexplored. In this study, we find that Vega (the sensitivity of executives’ wealth to stock return volatility) weakens the negative relation between PMC and R&D. We also find that Vega strengthens the negative relation between PMC and firm performance when R&D investments grow higher. In sum, our results suggest that high‐Vega compensation portfolios in competitive environments may induce executives to overinvest in R&D projects, therefore hurting firm performance.

中文翻译：

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高管风险激励措施，产品市场竞争和研发

先前的研究已经检查了产品市场竞争（PMC）和研发（R＆D）投资之间的关系，而高管风险激励对该关系的影响尚待探索。在本研究中，我们发现Vega（高管财富对股票收益波动率的敏感性）削弱了PMC与R＆D之间的负相关关系。我们还发现，当研发投资增长时，Vega加强了PMC与公司绩效之间的负面关系。总而言之，我们的结果表明，竞争环境中的高维加薪酬组合可能会诱使高管对研发项目进行过度投资，从而损害公司绩效。