When Bad News Strikes: How the Scope and Duration of Negative Performance Feedback Shape R&D Manipulation

ABSTRACT The relationship between performance feedback and risk‐taking has been widely examined within the behavioral theory of the firm. However, how performance feedback influences firms' R&D manipulation remains unclear. This study argues that negative performance feedback plays a critical role in shaping R&D manipulation behavior. Using panel data from Chinese A‐share listed manufacturing firms from 2009 to 2019, we find that the scope of negative performance feedback is positively associated with R&D manipulation, while the duration of negative performance feedback is negatively associated with R&D manipulation. Furthermore, CEO tenure weakens both the positive effect of feedback scope and the negative effect of feedback duration on R&D manipulation. In contrast, CEO career horizon amplifies the positive effect of feedback scope on R&D manipulation. These findings enrich the performance feedback literature by introducing a new behavioral outcome and offer theoretical insights for firms aiming to curb such opportunistic behavior.