Ownership Concentration、Managerial Compensation、Managerial Characteristics And Technical Innovation

With the market is more and more competitive, technical innovation is the key factor for organizational survival, profitability and growth. Technical innovation will create new products and new production processes, which not only response to the changed market, but also improve the company’s performance by introducing new revenue streams. However, since ownership is separated from control within our firms, the managers may have not enough incentive to invest in technical innovation projects because of the classic principal-agent problem. Thus, it is very important to motivate the managers to support the technical innovation and chase the company’s long-term development.In this paper, I empirically studied the relationship between corporate governance (ownership concentration、managerial compensation、managerial tenure and Founder-CEOs) and technical innovation based on the data of 235 companies listed in Shenzhen Small and medium-size Enterprise Stock Market, from the year 2009 to 2011. Main findings and conclusions of this paper are as follows:In the non-state-owned enterprises, (1)There is a significantly negative correlation between ownership concentration and the input of technical innovation(R&D_ratio); (2) Managerial pay-performance sensitivity based on cash is significantly positively associated with the input of technical innovation(R&D_ratio); (3) Managerial compensation based on equity has a significant positive effect not only on the input of technical innovation(R&D_ratio), but also on the output of technical innovation(Patent_size); (4)There is a significantly positive relationship between Founder-CEOs and the output of technical innovation(Patentsize); In the state-owned enterprises, (1)The compensation of the chairman of the board based on equity is significantly positively related with the output of technical innovation(Patent_size); (2)The tenure of the chairman of the board is significantly negatively associated with the output of technical innovation(Patent_size), that is the frequency of turnover of the chairman of the board is significantly positively correlated with the output of technical innovation(Patent_size).