The Impact Of Enterprise Innovation On Executive Compensation

In recent years,there are more and more domestic listed companies,and the salary of senior managers has been pushed to the forefront.There is a wave of research on the incentive mechanism of senior managers in academia and practice.At the same time,innovation will promote the development of the national economy,increase the income of the national economy and widen the gap between the rich and the poor.However,the current domestic research on the impact of lack of innovation on executives and ordinary workers income empirical research,innovation’s influence on the internal income gap remains to be studied.Therefore,it is of great practical significance to study the impact of enterprise innovation on the salary of senior managers,the salary treatment of ordinary employees,the salary difference within the company,and the impact mechanism on the salary of senior executives.This paper takes non-ST listed companies and manufacturing listed companies in China from 2005 to 2019 as samples to investigate the impact of enterprise innovation on executive compensation,average employee compensation and income inequality.Study the impact of enterprises with different scales and different property rights on innovation.At the same time,the paper examines the impact of firm innovation on executive compensation through the characteristics of firm operation and executive power.First,in the selection of variables,the logarithm of the number of patent applications was selected as the independent variable,and the R&D expenditure was selected as the independent variable in the robustness test.The dependent variables are the log mean of executive compensation,the average log of average employee compensation,and income inequality.Income inequality is the logarithm of the difference between executive pay and the average worker’s pay.In the stability,also selected the first and top three executive compensation.Control variables include firm size,firm property characteristics,internal governance and firm nature.In terms of model selection,due to the delay of enterprise innovation effect,this paper uses the fixed panel model with all explanatory variables lagging behind one period as the benchmark,and controls the year and industry.In addition,it can be seen from various references that the executive compensation level has an important impact on corporate innovation.Therefore,in order to overcome the strong endogenous impact caused by reverse causality,a systematic GMM model is also adopted.In the benchmark model,this paper examines the impact of innovation on executive compensation,ordinary employee compensation and income inequality.The results show that enterprise innovation promotes the growth of executive compensation,but it will not have an impact on the salary of ordinary employees,and finally increase income inequality.In the part of property right heterogeneity,this paper also examines the impact of innovation in state-owned enterprises and non-state-owned enterprises on executive compensation,ordinary employee compensation and income inequality.The results show that the increase of executive compensation and the expansion of income gap brought by enterprise innovation to state-owned enterprises are far less than that of non-state-owned enterprises.We believe that it may be mainly because the remuneration of state-owned enterprises is more open and transparent and attaches more importance to qualifications.The formulation of remuneration of non-stateowned enterprises is more vulnerable to market regulation and executive power.In the part of heterogeneity of enterprise scale,the benefits brought by innovation of smallscale and large-scale enterprises are basically distributed to executives,but the growth rate is different,and the final widening gap is also inconsistent,and the income gap of small-scale enterprises is larger.In the mechanism part,we examine the impact of enterprise innovation on non market factors such as labor productivity,enterprise scale,market factors,equity checks and balances,executive gender ratio,and the number of executives with overseas education background.It is found that enterprise innovation mainly improves executive compensation by affecting enterprise productivity and enterprise scale,and has little impact on non market factors.In general,corporate innovation will lead to higher executive compensation and wider income inequality.At present,there are still many deficiencies in the innovation of Chinese enterprises,and there are also unreasonable parts of executive compensation.Therefore,both the government and enterprises need to make certain responses.