Research On The Influence Of Executive Compensation Gap On R&D Investment Of High-tech Companies

High-tech enterprises are the mainstay of technological innovation in our country. Its innovation ability is not only related to the country’s independent innovation level, but also to the promotion of enterprise’s competitiveness, thus for High-tech enterprises, R&D spending is particularly important. Executives have decision-making power. They master the rich information resources. For personal benefits and the risk point of view, the R&D investment is often more circumspect. Principal-agent theory insists that discrepancy between top management and shareholders can be effectively alleviated by taking certain proper measures of encouragement on top management. Hence shareholders and top management can reach an agreement in terms of interest and they are encouraged to make strategic decisions including R&D investment from the angle of business’s long-term development. A reasonable pay gap is important for compensation mechanism to play its incentive effect, the important factors in recent years, the executive pay gap problem cause the attention of the academia, the tournament theory is that executive pay gap within the team, the greater the incentive effect is better. Based on the principal-agent theory and tournament theory framework, this paper uses the method of combining normative and empirical research, studies the effect of executive pay gap on R&D spending of new and high technology listed companies.This essay comprises 5 parts. Part 1 introduces the essay’s research background and its significance, research briefs from home and abroad, research thoughts and approaches, innovation and characteristics. Part 2 is composed of relevant theories and foundations. It defines concepts including top management, pay difference and R&D investment as well as elaborates principal agent theory and tournament theory. Part 3 is theory analysis and research hypothesis. This part depicts the current situation of pay difference of China’s listed companies and R&D investment, studies the mechanism of action of how pay difference for top management influences R&D investment. Part 4 is a demonstration research. This essay selects statistics for listed hi-tech enterprises in China from 2010 to 2014 as a case study to explore influence of pay difference for top management on R&D investment. Part 5 is research conclusion and policy suggestions. The results of this study as follows:The correlation between Executive pay gap in high-tech listed companies and R&D Investment is significantly positively. Namely, the executive pay gap within the team can promote the enterprises to increase R&D investment. But this effect is not significant in state-owned enterprise sample. Through further study, in private enterprises, the influence of executive pay gap on R&D exist interval effect.In this paper, the possible innovation point lies in the research perspectives and research content. For research Angle of view, most existing literature explored the governance effect of executive pay gap from the angle of performance. This paper combine executive pay gap with technology innovation, research the effect of executive pay gap on R&D spending. For research content, in this paper, High-tech Companies are the research object. Combined with the nature of the property comparison research, This paper breaks through the limitations of previous research, based on the analysis of linear relationship between executive pay gap and R&D input, further test the possibility of the existence of interval effect. It has certain innovation.