R & D Investment Based On Corporate Governance And Enterprise Performance

Corporate R&D activities have been increasingly important and firms in our country have become the main funding body of R&D, which is similar to developed country. However, the structure is not proper that foreign enterprises'R&D funds are too high while domestic enterprises'R&D funds are seriously inadequate. The nature of R&D activities (high-risk, trans-period income, serious information asymmetry) makes agency problem particularly serious, which will directly affect R&D investment level and outputs. Appropriate corporate governance mechanisms can reduce information asymmetry, so as to solve agent problem. Consequently, the study researched the restrictive factors of R&D input and output from the perspective of corporate governance.At first, the paper reviewed the documents of the effect of corporate government on R&D input, the relationship between R&D input and firm performance and the moderating effect of corporate government on the relationship between R&D input and firm performance. Then, the paper put forward to hypothesis based on analyzing the agent problem of R&D activity, the relationship between corporate government and R&D input and the moderating effect of corporate government on the R&D input-firm performance relation. Finally, the paper examined the hypothesis using Chinese listed manufacturing firm's data and proposed policy suggestions. In empirical study, descriptive statistical analysis, independent-samples t-test and multivariate regression analysis were used. This paper identified all kinds of moderating variables by hierarchical regression and subgroup analysis. The main contributions of the study are as follows:Firstly, using foreign study experience of corporate government's moderating effect on R&D input-firm performance relation for reference, the paper studied corporate government's moderating effect on the relationship between Chinese enterprise R&D input and performance. Results show that:state holding and leadership structure are pure moderator and non-institutional corporate shareholder is quasi moderator, which moderate the direction and form of the relationship between R&D investment and firm performance and play a direct role; Board meetings, managerial ownership and board ownership are homogeneous moderator which change the strength of R&D-firm performance relation and play a indirect role. while institutional block holder, individual block holder, board size, strategic committee and independent directors have no moderate effect on the relationship.Secondly, this paper comprehensively examined Chinese institutional investors'role in R&D activities. The results show that institutional investors no longer accord with myopic investors hypothesis and with professional advantage and scale effect, they evaluate firms synthetically and invest to firms with large development potential and strong innovation capacity. So Chinese institutional investor is in accord with superior investor hypothesis.Thirdly, this study not only examined the moderating effect of board and block holder but also examined the moderating of executive's equity incentive. The empirical results indicate that independent directors and institutional investors have no moderating effect on the relation, while managerial equity incentive moderates R&D spending-performance relationship positively. We can draw the conclusion that it is very difficult to supervise R&D activities due to its serious information asymmetry and high degree of professionalism and incentive mechanisms that is to give managers a certain degree of equity may be better to solve the agent problem.This study provides some theoretical guidance and empirical experience to optimize the governance structure of China's listed companies, to improve corporate R&D investment and its outputs, to enhance firm's independent innovation capability, and to promote company performance eventually.