Research On The Moderating Effect Of The Top Management Team Characteristic On Correlation Between The R&D Investment And Enterprise Value

Our government has realized that the research and development is very important to ournation and the enterprises, so the government begin to pay more attention to the research anddevelopment activities. The enterprises also spend more and more on the R&D activities. Sothe execution effect of the high R&D input is becoming more and more attractive. In recentyears, some scholars constantly try to study this issue from different angles. However, due tothe limitations of the research methods and data, the study of this part is always staying in therelatively simple level. The top management team plays the key role in the process of R&Dactivities. Their behavior determines the whole investment of R&D activities and theimplementation arrangements, while parts of the behavior are determined by the demographiccharacteristics. Therefore, this paper tries to analyzing the moderating effect of the topmanagement team characteristic on relationship between the R&D investment and enterprisevalue with a more unique perspective.This paper studies the empirical analysis based on the sample of listed company that hasdisclosed the R&D information on the Shenzhen gem from2010to2012. Firstly, this paperteases out the related literature at home and abroad of the relationship on the R&D investmentand enterprise value, top management team characteristics and R&D investment and topmanagement team characteristics and enterprise value. Secondly, this paper analyses thecauses of correlation of R&D investment and enterprise value based on the technologicalinnovation theory and the signal transmission theory, expounds the necessity of introducingthe top management team from the perspective of the entrepreneur ability, and puts forwardthe hypotheses of this paper on the basis of executives echelon theory. Then, using theregression analysis method to test the correlation of the gem listed company’s R&Dinvestment and enterprise value and the moderating effect of the top management teamcharacteristic on the correlation between the two. Finally, doing the robustness test andputting forward some policy suggestions.This study found that, the average age, educational background and technicalbackground of the senior management team played a significant positive regulatory role forthe relationship between R&D investment and enterprise value, namely when the R&Dinvestment amount in certain circumstances, the more closely the relationship between R&Dinvestment and corporate value when the greater the average age, the higher the educationlevel and the higher the technology-based senior management team the ratio within theexecutive team. Which indicates that during the R&D activity management of the current Chinese companies listed on GEM, the executive team’s age, education background andtechnical background brings more social capital and management expertise to help performR&D activities, and help businesses achieve higher corporate value. While the average tenureof the senior management team has a negative regulatory role for the relationship betweenR&D investment and enterprise value, but no significant statistical results, which may becaused by self-interested behavior of senior managers and experience compliance, ignoringthe changes of the market. The final part is the relevant policy recommendations. At themacro level, the government should strengthen the encouragement, guidance and support forthe enterprises’ R&D investment; and at the micro level, the enterprises should pay attentionto the building of top management team, and pay attention to the age composition, continuingeducation and technical background, trying to construct a reasonable and effectivehigh-quality top management team.