Research On Relation Between Corporate Governance And R&D Investment Of Listed SMEs

Globally, the major economices have put SMEs in the more important place in order toactuate innovation and increase employment opportunities. Since the Reform&Opening,SMEs in China also have promoted on the whole, and have become one important power topromote the national economy after rapid development of thirty years. However, SMEs inChina have exposed the deeper issues, one of which is the lack of R&D investment and coretechnology in the post financial crisis. In China, numerous SMEs have established corporatesystem but awful governance structure, so enterprises hardly construct R&D investment me-chanism strategically. Consequently, some problems, such as the relationship between thecorporate governance structure and R&D investment, as well as the solution to improve thecorporate governance structure to adjust the enterprise R&D investment mechanism, areworth being studied deeply, also is the starting point of the research.Through reviewing the existing literature, the research hypotheses are put forward on thebasis of theoretical analysis. This paper makes empirical study on the relationship between thegovernance structure and R&D investment, by analyzing the continuous disclosure balancepanel data of the manufacturing and information technology companies from SMEB inShenzhen Stock Exchange during2010-2012, with the help of statistics software Stata10.0forstatistical descriptions and regression analysis. The main conclusions are as follows.First of all, there is significant U-type nonlinear relation between the shareholding pro-portion of the largest shareholder and R&D investment, and extremum is43.08%. Take theratio of the shareholding proportion of the second shareholder to the largest as proxy variableof ownership restriction ratio, and there is a positive influence of it on R&D investment, notthrough the T-test. The non-state-owned checks balances shareholders’effect to restriction ispoorer than state-owned.Secondly, CEO Duality and R&D investment present the not-significant negative relatedrelation in the fixed effects model, but positive in the mixed OLS model which ignores enter-prise individual effect. The increase of the independent directors’proportion does not haveobvious effect to improve the R&D investment, in the board of directors with CEO Duality,independent directors exist negative effects on R&D investment; there is the remarkablenon-linear relation between the scale of the board of directors and the R&D investment, withthe increase in the scale of director board, R&D investment first decreases, then increases, and finally decreases, and the optimal scale is9.Thirdly, the excessive executive equity incentive can reduce the enterprises’R&D in-vestment, in the case of low equity incentive, the executives’shareholding proportion have arole in promoting the R&D investment. The proportion of director boards’shareholding andR&D investment assume positive related, the board of supervisors’shareholding ratio and theR&D investment present negative correlation, but both failed to pass the test of significance.Finally, based on the empirical test results and research conclusion, this paper makessome targeted recommendation. Then it briefly describes the limitations and prospects.