Corporate Governance,CEO Tenure And R&D Investment

Technology innovation is the crucial element for the development of a firm and even a country.To the firm view,technology innovation strategy is associated with firm's development in long run and is the core element to succeed.For the country view,technology innovation is the key to achieve the goal of building an innovative country.R&D activities of firms are important reflection of technology innovation,and R&D investment is always the core element of R&D activities.Therefore,we carry out this study on R&D investment to find ways for firms to promote technology innovation and increase firm's innovation ability.There are many factors that play a role in R&D investment,in which corporate governance is an important factor.Corporate governance can not only affect the distribution of enterprises'innovation resources,but also have an important impact on corporate innovation decision-making,so corporate governance has always been a hot topic for innovation scholars.CEO is not only the key figure of corporate governance,but also the actual executor of R&D decision-making,furthermore CEO is the key of the principle-agent problem,and has important effect on firms' R&D activities.This paper examines how corporate governance affects R&D investment by combining the limited competence and managerial opportunism two agency models,and taking CEO tenure and dynamic effect of corporate governance into consideration.under the support of literature and theory at home and abroad,the paper puts forward the corresponding hypothesis and proves it through the empirical method.Given that the high strength of R&D in high-tech industry,and its generally high level R&D investment,this paper chooses listed companies of high-tech industry as the object of empirical research.This paper chooses the data of China's high-tech listed companies in 2010-2015,controls the impact of R&D investment lag,makes dynamic panel data,and uses generalized method of moments(GMM)to carry out empirical research to explore how CEO stock options,CEO duality and independent directors affect corporate R&D investment under different CEO tenure.This paper finds that the impact of corporate governance decisions on R&D investment has different effects at different stages of CEO tenure.In early stage of CEO tenure,CEO stock ownership will reduce R&D investment,while in later CEO tenure,CEO shareholding increase R&D investment and can be very effective in promoting research and development.In addition,the CEO duality(CEO and chairman of the board are same person)also has different influence on R&D investment in different stages of CEO tenure.In early stage of CEO tenure,CEO duality can effectively promote R&D investment,while in the later stage of CEO tenure will inhibit R&D investment.But in the later stage of CEO tenure,independent director's ratio and R&D investment are positively related,but not significant.This may because the independent directors in China are not absolutely "independent".This study suggests that corporate policymakers and shareholders cannot ignore the concerns of corporate micro-governance when developing corporate governance strategies.Pay attention to CEO tenure and adopt appropriate corporate governance strategies at the right time to promote R&D investment and enhance business creativity.