Research On The Correlation Between Executive Incentive And R&D Investment Of The GEM Companies

The main problem of China’s industrial upgrading is how to encourage enterprises to develop independent innovation. Companies want to survive in the fierce competition in society, should insist on technological innovation. So how to develop a reasonable compensation contract to increase R&D investment.GEM was established in 2009, among which high-tech enterprises accounted for 95%, strategic innovation oriented enterprises accounted for 74%.GEM is the main body of technology innovation of China’s economic transition period, just copy the pay system maybe not that fit. Combined with the characteristics of the GEM, to find a reasonable salary structure and incentive mechanism, to promote the enthusiasm of independent innovation, strengthen the risk management of R&D projects, accelerate the transformation innovation achievement. Provide a certain reference for China’s economic transformation.Research on the relationship between executive compensation and R&D has not get the same conclusion, especially for GEM companies. Previous research is mostly about the whole R&D expenses. This paper also analysis the correlation between the development expenditure and the executive incentive, because the development expenditure can reflect the enthusiasm and innovation achievements better. This paper use WLS to control the influence of heteroscedasticity.Draw the conclusion that, executive shareholding ratio is positively correlated with the R&D investment intensity and innovation investment intensity significantly, Executive short-term salary and R&D investment intensity have positive correlation significantly. Executive short-term salary and innovation investment intensity have no significant negative correlation. The use of compensation incentive may encourage executives to invest more in R&D investment, whether it is short-term income or equity incentive. So GEM has the problem of lack of incentive. Combined with the grouped regression conclusion, GEM companies can increase the executives shareholding appropriately, hold still short-term income, to promote executives increase R&D activities to increase the value of the company, and fully consider the transformation of R&D results.