Research On The Mechanisms And Application Context Of Executive Ownership On Innovation Output In State-Owned Enterprises

Medium-and long-term incentives arrangements,such as executive ownership plan,are the necessary governance mechanisms for innovation and sustainable development,but their mechanisms and application boundaries are not yet clear.To address the theoretical gap and practical pain points of the relationship between executive ownership plan and innovation output in SOEs,this paper argues that the theoretical boundaries and categorization indicators of executive ownership plan should be concerned,which cannot be standardized to all SOEs.Both executive ownership and corporate innovation activities can improve the degree of sustainable development,while the current conclusions are inconsistent.Proponents argue that executive ownership can motivate top managers to proactively take part in innovation related activities,such as increasing innovation investment,and thus align the interests between shareholders and executives,while opponents argue that executive ownership can ensure that executives share the gains from the rising of stock prices with shareholders,but it cannot ensure that shareholders and executives share the risks from the falling of stock prices,which might intensify executives’opportunistic behaviors and thus weaken the effectiveness of executive ownership in promoting innovation activities.The reason for the inconsistent conclusion might be stemmed from ignoring the theoretical boundaries of executive ownership’s governance effectiveness.This paper takes the A-share state-owned listed firms in Shanghai and Shenzhen(2006-2019)as the research sample,and further identifies the governance mechanisms and boundaries of executive ownership on SOEs’ corporate innovation activities,so that to provide the supports to the implementation of executive ownership plans.In this case,we can not only respond to the practical demand of medium and long-term incentive arrangements’categorized executions,but also provide the necessary theoretical exploration for medium and long-term incentives in SOEs.The main conclusions:First,executive ownership can effectively promote innovation outputs of SOEs.Second,we further explore the potential mechanisms.The results demonstrate executive ownership mainly affects the level of innovation outputs by restraining executives’ moral hazard motives and weakening the executives’ myopia.Third,the results of applicable context tests find that the effect of executive ownership on innovation outputs is more significant in state-owned key enterprises,high-tech SOEs or the SOEs experiencing growth period.The theoretical contributions of this paper are mainly reflected in the following three aspects:First,we expand the theoretical boundary of executive ownership’s governance effects on corporate innovation.Second,we clarify executive ownership’s influence mechanisms on innovation output of SOEs.Third,we also explore executive ownership’s applicable contexts and identifies the classification basis.Meanwhile,this paper also contributes to the practices of SOEs reforms:First,the state-owned assets regulators should design the suitable mechanisms to implement executive ownership plans,and avoid "one-size-fits-all" measures.Second,SOEs should actively establish and promote their corporate governance structure to create a favorable institutional environment for the implementation of medium-and long-term incentives such as executive ownership plan.Finally,SOEs should follow the guiding ideology of "policy-making according to enterprise and industry" and precisely construct the appropriate executive incentive portfolio to meet the requirements of current SOEs reforms.