Executive Incentives,Management Power And Corporate R&D Investment

With the continuous development of modern society,the ability to innovate has become the core competitiveness of enterprises,and an important means to improve the ability to innovate is to continuously increase investment in research and development.The amount of investment in R&D by enterprises depends on the degree of emphasis on R&D by executives.However,the degree of emphasis on R&D investment by shareholders and managers of the company will be affected by the incentive mechanism of the company.Corporate executives are the decision-making body of R&D investment.The high risk of innovation investment and long cycle characteristics may affect the shortterm profit of the company,which will affect the personal performance of the executives.For their own interests,the executives may have a negative attitude towards innovation investment.Therefore,it is necessary to give executives appropriate short-term compensation incentives or equity incentives,reduce the principal-agent problem,and align the interests of shareholders and managers,and jointly promote the healthy and sustainable development of enterprises from a long-term perspective.In addition,combined with the basic situation of listed companies in China,executives play an important and decisive role in corporate R&D investment decisions,and may exert pressure on the board of directors through their own power,which in turn will affect the efficiency and effectiveness of incentives for executives.Due to different incentives,executives' decision-making power may show different adjustments in the relationship between executive incentives and corporate R&D investment.At present,most of the researches on executive incentives at home and abroad are about the relationship between research and development investment and corporate performance,but lack of research on the regulation of management power.Therefore,from the perspective of management power,this paper uses different variables to measure management incentives,and studies the relationship between “executive incentives—management power—enterprise R&D investment” to verify the “agent theory” and “ The practical significance of the theory of information asymmetry,and study whether executives and how to use their decision-making power to influence the board of directors,so as to achieve the purpose of self-determined salary,in order to improve the incentive mechanism of listed companies and ultimately provide an empirical basis for improving the R&D investment of enterprises..On the basis of theoretical analysis,this paper uses empirical research to analyze the impact of executive incentives on R&D investment,and examines the role of executive incentives in regulating R&D investment from the perspective of management power.First of all,this paper sorts out the relevant literature on management power.Secondly,it puts forward relevant assumptions based on principal-agent theory and management power theory,and selects 6879 empirical data of 1069 companies of all A-shares in China from 2010 to 2016 as research samples.The relationship model between executive incentives,management power and enterprise R&D investment was constructed.The method of multiple regression analysis was used to empirically test the relationship between executive incentives and R&D investment and the adjustment of management power to the relationship between the two;then based on the results of the empirical test to draw the conclusions of this study and its robustness test.In further analysis,this paper decomposes the management power indicators,analyzes the differences in the effects of executive incentives from different sources of management power,and objectively and comprehensively studies the binding role and incentive mechanism of management power.Finally,the policy recommendations are put forward and the limitations of this study and the prospects for future research are pointed out.The research results show that:(1)Executive monetary compensation is positively correlated with corporate R&D investment.The higher the short-term monetary compensation of executives,the willingness to increase investment in R&D;(2)The shareholding of executives is positively related to R&D investment.The greater the shareholding ratio of executives,the more investment companies have in R&D projects,and the equity incentives can stimulate the independent innovation consciousness of enterprises;(3)The power of management plays a negative role in the relationship between executive monetary compensation and R&D investment;(4)Management power plays a negative role in regulating the relationship between executives' holdings and corporate R&D investment.Compared with non-state-owned enterprises,this role is more obvious in state-owned enterprises.The research in this paper enriches the research on the relationship between executive incentives and R&D investment,and discusses the regulatory role of management power from the different sources of power of executives.The final conclusion is how to formulate effective compensation incentives for enterprises.It provides a theoretical basis and provides new clues and evidence for in-depth research and improvement of corporate governance and management power effects.