Research On The Impact Of EVA Assessment On Firm's R&D Investment And Its Economic Consequences

Building an innovative country and improving national innovative capacity are the main themes of the present and future development of China,which depend on the R&D investment of enterprises.However,the inherent characteristics of R&D activities prevent corporate operators increasing R&D investment from which they are likely to benefit for a long run.Moreover,problems such as owner absence and insider control that stem from the unique system of state-owned enterprises aggregate the agency problems,coupled with the mismatch of power and responsibility caused by inadequate incentive and restraint administration as well as traditional financial indicators,state-owned operators are more likely to reduce investments with long-cycle and slow return,all of these reasons induce the lack of R&D investments of state-owned enterprises.It is a great opportunity to investigate the influences of Economic Value Added(EVA)assessment on R&D investments from the perspective of performance appraisal because the State Council has implemented EVA assessment since 2010 towards the central-state-owned enterprises.This research not only extends the related researches on influencing factors of R&D investments,but also tests the local implementing effects of EVA assessment which is originated from western countries.Based on technology innovation theory,principal-agent theory and enterprise incentive theory,after comprehensively reviewing related literature,this dissertation investigates the impacts of the EVA assessment on the R&D investments of state-owned enterprises and its economic consequences using a sample of Chinese A-share listed companies over 2007-2013.According to the nature of research aims and data,methods such as difference-in-difference model(DID),propensity score matching(PSM),negative binomial regression,ordinary least square(OLS)regression and comparative analysis are used to avoid endogenous problems in current studies and give more robustness results.The results display that the implementation of EVA performance evaluation has indeed improved the R&D investment of state-owned enterprises significantly,compared to enterprises without implementing EVA assessment,R&D investments of the implemented enterprises improved greatly in respect of both absolute and relative amount;further researches show that there arethree contingent factors,namely industry characteristic,life cycle stage of company and the degree of market competition,influence the effect of EVA assessment on R&D investment.Compared to companies in general industries and lower degree of market competition,EVA assessment has a significant promotion effect on the R&D investment of companies in high tech industries and higher degree of market competition.R&D investments of companies from different life cycle stages react differently towards EVA assessment,and the promoting effects perform strongest in the mature period,followed by that in the growth period and decline period fell to the last;results also show that it can not provide the empirical evidences that the EVA assessment has a significant promoting effect on economic consequences of R&D investments which are represented by patent and firm value.Finally,some relevant policy recommendations towards further revision of the EVA assessment are put forward according to the above theoretical analysis and empirical evidences.