Moderating Effects Of Executive Incentive On The Value Relevance Of R&D Capitalization And Expensing

China’s economic downward pressure is big, economic growth momentum is weak,policy relaxation space by real estate prices, inflation and excess capacity and a largenumber of physical factors, adjust the economic structure and development innovationis the most effective breakthrough in current economic environment. Only under theleadership of the responsible of the management, rely on scientific and technologicalprogress, focus on cultivating high-quality talents, looking for new economic growthpoint, realize the smooth transition of economic development, to maintain the economycontinues to grow.Based on the disclosure of R&D input data in2007-2012and executivecompensation, ownership, and complete data of2743listed companies as researchsamples, based on the price of the stock model, using hierarchical regression analysis,empirically the executive incentive for the influence of R&D capitalization andexpensing value relevance. The empirical results indicate that:1. The enterprise’s R&Dcapitalization investment significantly positively related to stock prices. R&DCapitalization bringing incremental information, suggests that a successful R&D projectcan improve the stock price. And enterprise R&D expensing investment is significantlynegative correlation with the stock price, passed negative information to investors.2.Executive equity incentive and the stock price is a significant positive correlation.Rising executive holdings, can make its own interests and the interests of investors, inmaking business decisions can be more starting from the enterprise value maximization,reduce the risk of moral hazard and adverse selection, so as to realize win-win.Executive compensation incentive and the stock price has no significant positivecorrelation, reveal some of the listed company executive pay inflated unreasonablephenomenon, executive compensation should be rational return to normal standard,guarantee the quality of executive incentive.3. Half of executive equity incentive is thecapitalization of R&D value relevance regulation variables, can affect the correlationbetween the capitalization of R&D investment and enterprise value. Executive equityincentive is helpful to promote the enterprise investment in R&D activities, corporateexecutives shareholding ratio is high, the R&D strength.Finally, According to the theoretical analysis of our executive incentive andempirical research results, the executive incentive, this paper puts forward the following Suggestions:1.Competitive compensation2.improve the shareholding of seniorexecutives.