An Empirical Study Of Executives Shareholding On R&D Investment

The development of the technology has been the significant element of modern enterpriseand prosperousness of our country, so the importance of R&D for a firm’s development isself-evident. For the asymmetrical information of the company, the problem of principal-agenthas been obvious. According to the current situation of enterprises in our country, executiveincentive has been always a question which is ignored. However, executive incentive ispropitious to lower the agent cost for the company, and to urge the senior executive to focuson the long-term development, R&D and innovation. On the base of the principal-agent theory,this paper works on the effect of executive stockholding to R&D investment, by the specimenof listed companies in Yangtze River Delta Area.There are five captures in this essay. The first part is the introduction, which demonstratesthe background meaning, context, method, framework, innovation and relevant theory’sdefinition of the study. Theoretical basis and literature review of this research are the secondpart. First of all in this part, three main company governance theories (Principal-Agent Theory,Transaction Cost Theory and Theory of Property Rights), motivation theory, R&D andtechnology innovation theory are reviewed in this paper. Then, it demonstrates the effects ofexecutive stockholding to R&D investment in the documents both here and abroad. In thethird part, there is the research design. After putting forward to the relevant hypothesis, itbrings up the origin and choice of sample, DATA and variation. Finally, on this base,regression model is set up. Empirical analysis is in the fourth part. After statistical descriptionand frequency analysis to all the samples, it brings up the empirical analysis to the effect ofexecutive stockholding to R&D investment, separately for state-owned enterprises,non-state-run enterprises, new high-tech enterprises and non-new high-tech enterprises. In the last part, there are conclusion, suggestions and deficiency.According to the research, there are four perorations. Firstly, executive stockholding andR&D investment in a company are positively related. Secondly, the larger proportion ofexecutive stockholding, the more enterprise’s R&D investment. Thirdly, executivestockholding in the non-state-run enterprises and R&D investment are positively relevant.While, executive stockholding and R&D investment is not remarkably relevant, in thestate-run enterprises. Finally, compared to the non-new high-tech companies, there is the moreremarkable effect of executive stockholding to R&D investment in the high-tech firms.