Corporate Governance,Corporate R&D And Corporate Performance

Nowadays,China is accelerating the establishment of a “dual circulation” development pattern in which domestic economic cycle plays a leading role while international economic cycle remains its extension and supplement.Under the new situation,focusing on domestic circulation requires tapping its own potential and reducing dependence on foreign technologies and markets.It requires strengthening independent innovation and driving high-quality economic development with innovation.In recent years,the R&D investment of Chinese enterprises has been increasing year by year,but there is still a big gap compared with Western developed countries.In recent Sino-US trade friction,the United States frequently curb domestic key high-tech enterprises relying on its strong technological advantages,which has a serious impact.This fully demonstrates the significance of independent innovation on the development of enterprises and the national economy.importance.So,what are the key factors that affect the R&D of Chinese enterprises? How to motivate enterprises to increase R&D investment does matter.Based on the problems above,this paper mainly used the data of A-listed manufacturing companies from 2008 to 2018.In previous studies,there have been few attempts to explore corporate R&D from the perspective of corporate governance,and there has not been enough attention on how corporate governance affects corporate R&D.Obviously,related research is not sufficient.Based on this,the full text is based on the typical facts of imperfect investor protection laws and high equity concentration in China,and draws on the principal-agent theory to study how corporate governance works on corporate R&D,and analyzes how corporate R&D affects corporate performance.The relationship,through theoretical modeling and empirical analysis,demonstrates the internal logic and transmission mechanism of the two.The full text unfolds along the logical line of “Corporate Governance-Corporate R&D-Corporate Performance”.The main contents of the research are as follows:Firstly,we introduce total factor productivity as the corporate's performance,and examine the relationship between corporate governance and total factor productivity.The results show that:(1)the controlling shareholder's control power is negatively correlated with total factor productivity,and the difference between the controller's control right and cash flow right is negatively correlated with the total factor productivity.The deviation of the two powers will inhibit the improvement of enterprise's total factor productivity.Holding other variables unchanged,the nature of the controlling shareholder's state-owned equity has a significant negative correlation with the total factor productivity,indicating that state-owned controlling equity has a certain negative effect on the total factor productivity.(2)There is a significant negative correlation between the size of the board of directors and the company's total factor productivity.Since the composition of the board of directors largely depends on the controlling shareholder or actual controller,the size of the board of directors cannot bring a positive effect on the company's efficiency.It has a negative impact;also in the shareholding structure of the controlling shareholder,independent directors in the board of directors are difficult to be independent and cannot really perform their due supervisory functions.In this paper,it is found that the proportion of independent directors in the board of directors is not essential,and the impact of productivity is not significant.In addition,the TFP growth rate of a listed company with the chairman and CEO concurrently is significantly lower than that of other companies,indicating that the duality of chairman has a negative effect on the corporate TFP growth rate.(3)The salary of executives can significantly improve the company's total factor productivity,while the management's equity incentives have no significant effect on the improvement of total factor productivity,but only promote the improvement of the company's short-term value.(4)Considering the differences of the shareholdings' background,it reveals that the controlling shareholder's deviation of two rights has a more obvious inhibitory effect on tnon-state-holding companies' TFP,while the effect on the total factor productivity of state-owned holding companies is not significant;Easing the second type of agency problem of the non-state-owned company is crucial to the improvement of its total factor productivity.(5)Considering the impact of industry heterogeneity on the Corporates' total factor productivity,the research found that for non-state-controlled companies in emerging industries,the deviation of control rights and cash flow rights has a more significant negative correlation with the company's total factor productivity.The second type of agency problem inhibits the increase in total factor productivity in emerging industries that are not state-controlled,and many listed companies in China's emerging industries are non-state-holding companies.This result highlights the importance of solving the second type of agency problem for the healthy development of emerging industries.Secondly,corporate governance affects corporate R&D in two ways.On the one hand,the more serious the agency problem between controlling shareholders and minority shareholders,the lower the R&D investment of listed companies;according to the nature of controlling shareholders' equity,compared with actual controllers with state-owned background.The effect of non-state-owned actual controllers on the R&D investment of listed companies is more significant.Considering the difference between industries,compared with traditional manufacturing companies,the principal-agent problem between controlling shareholders and small and medium shareholders is more important for emerging manufacturing companies' R&D investment,the inhibitory effect is more significant.On the other hand,“Tunelling” behaviors arising from controlling shareholders will aggravate the financing constraints of listed companies,thereby indirectly inhibiting R&D investment.It showed that financing constraints to control the actual controller has a mediating effect relationship with the intensity of R&D investment.Thirdly,corporate R&D plays a significant role in improving corporate value and corporate total factor productivity.Specifically,this study found that the company's stock return rate can be regarded as the weighted average of the return on physical capital and intangible capital through theoretical derivation.The weight of the two mainly depends on the importance of physical capital and intangible capital in production.Furthermore,the R&D activities are decomposed into R&D investment intensity,R&D efficiency,and patent quality.and testing the relationship between the company's value and the company's R&D investment.The analysis found R&D intensity,R&D efficiency and patent quality are all significantly positively correlated with the company's value.After standardizing R&D investment,R&D efficiency,and patent quality,we found that patent quality has the most prominent role in enhancing corporate value during the entire process of R&D activities.That means making efforts in key technologies to increase the value of technological innovation.Corporate R&D is also crucial to improving the total factor productivity.The test results show that keeping other variables unchanged,the R&D investment intensity and R&D efficiency increasing by a standard unit will drive total factor productivity to increase by 0.1%.While compared with R&D investment intensity and R&D efficiency,R&D output is more important.According to the test results,for every standard unit increase in patent quality,the corporate's total factor productivity increases by 0.3%.Finally,we tested the existence of the mediating effect of corporate R&D.Using empirical analysis to bring corporate governance,corporate R&D,and corporate performance into the same framework,we established a set of regression equations for the mediation effect.Then We used the mediation effect test method to conduct empirical analysis.The test results show that in the transmission mechanism of corporate governance to corporate performance,R&D does have a significant mediating effect.Considering endogenity and robustness,the mediating effect is still significant.This result confirms the logical main line of this article,that is,corporate governance is the logical starting point of the problem,corporate R&D is the mediating effect,and corporate performance is the final result.Corporate governance will ultimately affect corporate performance through two channels,direct and indirect(corporate R&D).The main contributions of the research are as follows.First,it reveals the mechanism of corporate governance on corporate R&D,and explains the mechanism of corporate R&D by the principal-agent problem between controlling shareholders and minority shareholders from different perspectives.Secondly,by introducing R&D into the endogenous growth model,we found intangible assets and tangible assets are expanded how technological innovation enhances corporate value.It provides a new perspective for understanding the mechanism of technological innovation's impact on corporate value.Thirdly,disassembling the process of technological innovation into R&D investment,the three parts of R&D efficiency and patent quality,and the introduction of total factor productivity as a kind of corporate performance explains the effect of technological innovation on corporate efficiency.