Research On The Effect Of Equity Incentive Contract Structrue On R&D Input Of High-tech Enterprises

With the development of the knowledge economy, technological innovation is becoming an increasingly important means to enhance the country’s overall competitiveness. Enterprises, as the agent in micro-economy, its R&D input is the source to keep a enterprise competitive, which is necessary for both company’s long-term value building and the economic boom of a country. In modern enterprise system, the ownership and management of enterprises is separate, which will result in a principal-agent conflict between its owner and the manager since their utility goals differ. Managers, for their own interest as the agent, tend to aviod R&D input since it is opposite to the manager’s utility maximization goal due to its characteristics,such long cycle and high risk. Equity incentive, regarded as an effective solution to reduce agent cost, its design and implementation will inevitably impact CEOs’ decision and action, which also will have a influnence on enterprises’ R&D input.Chinese listed high-tech companies that have released and implemented their equity incentive plan from 2006 to 2013 are used are selected as sample in this study. Under the framework of principal-agent theory, motivation theory, residual claim theory and technological innovation theory, this paper proposed a new theory about equity incentive contract structure and explored the relation about the four main factors that characterize equity incentive contract structure(equity incentive model, equity incentive quantity, equity incentive timeframe and equity incentive object distribution) and R&D input of high-tech companies.The research result shows that different equity incentive models have different impact on the R&D input, stock option will promote the R&D input of high-tech enterprises, while restricted stock has a negative impact on the R&D input; the quantity of share ownership exerts an inverted U relationship with the R&D input, which means that there is a optimum share ownership and if equity incentive is higher than the optimal vaule, the R&D input would decrease with the quantity of share ownership; the longer the timeframe of equity incentive, the higer the R&D input; the wide distribution of the equity incentive object tends to promote the R&D input, and quantity of equity incentive has the posiive effects on the relation between distribution of equity incentive object and the R&D input.