The Relationship Between Executive Incentive Of China's High-Tech Enterprises And Firm's Performance

With the guidance of national policy in recent years, Chinese high-tech industry is developing rapidly. It is widely used in economic and social fields, plays a great role in the national economy and becomes the source and power of the rapid growth of national economy. As a knowledge and technology intensive economy entity, human capital plays an key role in development of enterprises. As the most important human capital, executives play a decisive role in the promotion of enterprise sustainable development. As a result, how to offer an effective incentive is getting more and more attention from theoretical circles and the business community. According to the principal-agent theory, an effective executive incentive is helpful to reduce agency cost. Thus, to know the mechanism of how it works and whether it works is the guarantee to implement that.This paper selected229listed companies from China's A-share market as a research sample. We use the intermediary variable method and research from perspective of executive shareholding and executive compensation. Firstly, we examined the relationship between executive intensive and firm's performance. Then, we analyzed the relationship between executive intensive and R&D costs input. Finally, we do research on the interaction among executive incentive,R&D costs input and firm's input to validate how the executive incentive mechanism works.Through the results of regression analysis, this paper draw the following conclusions:firm's performance will be significantly improved no matter executives hold share or have good compensation. The difference is firm's performance is more closely related with executive shareholding than executive compensation, the correlation coefficient of the former increases while that of the latter decreases. Executive shareholding and R&D costs input are positively related, the more executive shareholding, the more R&D costs input, the R&D costs input is positively related with executive compensation though unremarkable and not stable. R&D costs input is significantly positively related and it is consistent with previous studies that R&D costs input has a certain lag to firm's performance. Finally, we added R&D costs input variable and found that executive shareholding is still positively related with firm's performance, but the correlation coefficient decreased. Through the intermediary variable significant test statistic Z value test proposed by Sobel(1982), the intermediary effect is remarkable at5%level, which means executive shareholding improves firm's performance through changing R&D costs input.