Risk Preference, Agency Theory And R&D Intensity

R&D is basilic to keep a company competitive and efficient. It's necessary for both companys'long-term value building and the economic boom of a country. However R&D investment is far away from enough for companys in China so that it is important to discover the influences and enhance innovation intensity. On oneside,along with the benefits R&D is also full of risk, and the risk preference of enterprisers significantly influence their decision; on anotherside, as the dualit agency problems exit, there are differences between managers and shareholders as well as between large shareholders and small shareholders that they have different risk preference. The ownership structure can reflect these differences in some certain. So we begin from the analysis of risk of R&D investment and decision makers'attitude toward it, developing in the famous agency theory, to find the influence of ownership structure to R&D intensity, wich would help promoting R&D intensity of our country. We get samples from chinese listed companies from 2002 to 2006, and find empirical evidences mainly by the way of OLS. We find that:①there are differences of risk preference between managers and shareholders; Comparing to managers, shareholders are more willing to raise R&D. Stock incentives for managers can inspire them investing in R&D, however it's useful only the stock managers holding are enough; We even discover that R&D intensity can be significantly improved when the shares of managers reaching 0.1%;②Stock incentives are almost useless if there is a control shareholders, and can significantly increase R&D intensity when not;③Large shareholders have different risk preference from small shareholders, and they choose different R&D policy. When the largest shareholder hold less than 30% of company shares, R&D intensity would increase as the pecerntige of shares increase;when the largest shareholders hole more than 30% and less than 50%, there are no significantly result found; and when the largest shareholders hold more than 50% and less than 70%, there are significant negtive relation between R&D intensity and the largest shareholding percentige;④Ownership concentration of the top ten large shareholders excluding the largest one impositively influences the R&D intensity especially when there is a control shareholder, and it's not significantly when the largest shareholder holds more than 30% and less than 50%;⑤Different characters of shareholders behave almost the same; whether it is state-owner or not makes no significantly difference in R&D.