Moderating Effects Of Executive Incentive On Innovation Investment Performance

Facing the increasingly fierce market competition, more and more enterprises begin to do technology innovation, and vigorously conduct innovative investment to improve the independent innovation ability.Under the modern enterprise system, and the interests of business operators are not the same as shareholders, the shareholders pursuit high returns bringing from technological innovation and tend to achieve enterprise’s sustainable development through the enterprise technological innovation investment. However, the business operators may not to do innovation investment because of the high input and high risk of long cycle innovation activities, so as to damage the long-term interests of the enterprise. In order to link the interests of the shareholders and business operator, enterprises need to establish an effective incentive mechanism to incentive and restraint the business operator and align the interests of the shareholders and business operators.The study take those non-financial enterprises listed in Shenzhen main-board market from 2007 to 2011 as the research object, put forward the research hypothesis and build regression model through literature review and theoretical analysis, and use empirical analysis method to examine the relationships among executive incentive, innovation investment and corporate performance. In this paper, the result shows that there exists a significant positive correlation between executive equity incentive and innovation investment, as well as innovation investment and corporate performance. What’s more,executive equity incentive can strengthen the relationship between innovation investment and total factor productivity.Finally, based on the empirical results and actual situation, this paper puts forward suggestions to improve the current executive incentive system and innovation investment management from the stage of government and corporate. First of all, the government should continue to increase support for high-tech enterprise and guide them to carry out independent innovation and the enterprises can carry out modest executive equity to link the interests of executives and shareholders. What’s more, the enterprise should have consciousness of independent innovation and increase innovation investment. Last but not least, the stock bonus system and institutional stock holding system should be improved.