The Empirical Study On Contracted Incentives Of R&D Expenditure

Competition is one of the characters of the market economy. With the quickening of world economy and the fury of market competition, the enterprises of our country have realized that the researching and development activity (R&D) is just the basic and the key to form and advance their core competition ability. Because of its importance, the academia is still researching on it without interruption. But these researches are focusing on how to account the R&D expenditures and disclose the information about them. Among the researches on influencing factors to R&D expenditures, there are only a few are theoretical, while scarcely any is empirical. The contracted relationships between enterprises, governments, creditors and shareholders will influence executive's decision-making on R&D. Based on this point, a rational administration cannot help but to consider the related contraction effects from enterprise external governance mechanism. To do that, we build up a regressing model, which are the contracted incentives to R&D expenditures of Chinese listed companies. This paper wants to study and analyze the main recessive factors that influence the researching and development activity. By empirical study, we found that there is no significant relationship between R&D expenditures and the compensation contracts. It has also proved that the size of firm and the dividend payout ratio had obviously positive effect to the researching and development activity, while the asset-liability ratio affected R&D activity negatively. In the meanwhile, we found that the leadership structure and the durability also had obviously positive effect to the R&D activity. At last, this paper gives some material advice, such as push the government's investment on the R&D activity of big companies, broaden financing way of firms, enhance the enthusiasm of executives on R&D activity and establish an effective incentive system.