Research On The Relationship Between Management Compensation Contract And R&D Investment

The principal-agent conflict between management and stockholders is the research concentration. Management compensation plays important role in moderating the conflict. As the improvement of the management compensation system, company motivates management by long-term incentives. The research shows that the long-term incentives relate management's benefits to stockholders' benefits. Incentives to management not only mitigate the principal-agent conflict between management and stockholders, but also influence the investment strategies of management, especially the long-term and uncertain investments. First, combining management compensation with R&D investment, based on the literature review, the author analyzes the principal-agent relationship in enterprise. Second, the author explains the factors influencing management stock compensation and R&D investment respectively, and then proposes the basic hypothesis. Third, using the data of listed companies in China, the author constructs the simultaneous equation model to examine the hypothesis empirically and gets the conclusion. In the end, the author proposes policy suggestions in accordance with the theoretical and empirical research.The dissertation includes five chapters. The first chapter includes three parts. The first part states research background, research issues and research significance; the second part summarizes the research contents; the third part proposes research method----combination of normative study and empirical study, and the main innovations. The second chapter reviews and comments the research on interrelationship between management compensation and R&D investment at home and abroad. The third chapter is theoretical analysis, including three parts. On the basis of agent theory, the first part analyzes principal-agent relationship and the management compensation role in principal-agent conflict. The second part researches the change of management compensation contract. The last part analyzes the research situation on R&D investment. The fourth chapter is the empirical research on the interrelationship between management compensation and R&D investment. First, on the basis of the analysis of influence factors of management compensation and R&D investment, it proposes the hypothesis. Second, the author chooses the companies disclosing both management stock share and R&D investment as the research samples, defines the variables and constructs the simultaneous equations. In the end, the author analyzes the sample data by OLS and 2OLS. In the fifth chapter, the conclusions and expectations are put forward.The innovations are as follows: First, it combines the management stock compensation and R&D investment empirically. Second, it constructs the simultaneous equations to research the endogenous relationship between management compensation and R&D investment empirically. Taking the ratio of management stock compensation to total management compensation to measure management stock compensation, the author expands the research view. Third, the research shows that management stock compensation is obviously related to R&D investment. This indicates that the long-term incentive to management can mitigate the principal-agent conflict. The result supplies theoretical support for management stock incentives. When management stock compensation proportion increases, management are motivated to increase R&D investment.