Managerial Internal Pay Gap,Risk Taking And Corporate Innovation

In the past 40 years of reform and opening up,China's economy has achieved remarkable development achievements and become the world's second largest economy.With the rapid development of China's economy and the adjustment of economic structure,the innovation capability of enterprises has received more and more attention from the whole society.In his 2015 report on the work of the government,Premier Li Ke qiang put forward “mass entrepreneurship and innovation” and hopes to stimulate economic growth and promote national employment through innovation.The report of the 19 th National Congress of the Communist Party of China clearly pointed out that innovation is the first driving force for development and the strategic support for building a modern economic system.Due to the agency conflict between executives and shareholders,managers are unwilling to invest in innovative projects because of their own private interests.It is especially important to establish an effective compensation incentive mechanism.Innovative activities usually face higher risks.The high level of risk-taking is conducive to the technological progress of the enterprise and can significantly increase the market value of the enterprise.The pay gap can encourage executives to choose higher risk investment projects,strengthen managers' risk appetite,increase R&D investment,and improve innovation.Therefore,this paper attempts to study the relationship and mechanism of managerial internal compensation gap,risk-taking and corporate innovation.After combing the relevant literature and theoretical foundations at home and abroad,this paper is based on principal-agent theory,human capital theory,the tournament theory of and the risk theory,and puts forward the theoretical hypothesis about the relationship between managerial internal pay gap,risk-taking and corporate innovation.Taking all listed companies in Shanghai-Shenzhen A-shares from 2010 to 2016 as research samples,using empirical analysis methods,this paper studies the impact of managerial internal pay gap on the level of risk-taking and corporate innovation investment,and examines the indirect effect of risk-taking.It is found by empirical results that the managerial internal pay gap has positive incentive effect on corporate innovation investment;the internal pay gap improves the risk-taking level of enterprises by affecting managers' behavioral decision-making;the level of risk-taking plays a mediating role in the process of managerial internal pay gap stimulating management to improve innovation investment,and the intermediary effect exists only in non-state-owned enterprises and high-tech industries.After a series of robustness tests,the empirical analysis results are consistent with the above,which ensures the reliability of the conclusions of this paper.From the perspective of the internal salary gap of executives,this paper discusses its impact on innovation investment and innovation output,as well as the role of risk-taking in incentive activities for pay gap,and provides a reference for enterprises to improve incentive mechanism and improve innovation performance.