Empirical Research On The Influence Of Executive Compensation To The Enterprise Innovation Efficiency

From implementing “Innovation driven development strategy” to build “An innovation country”, then to “Public entrepreneurship, innovation”, the creative enthusiasm of the whole society was up, Chinese people used their wisdom to promote economic quality efficiency upgrades and make upgrade China’s economic development. With scarcity of innovation resources, continuous innovation investment does not necessarily bring higher yields, so need to improve the innovation investment of the conversion rate.Enterprise is the main body of innovation, improve the efficiency of enterprise’s innovation is the key to implement the strategy of innovation driven development. Management as actual practitioners of enterprise innovation strategy, how to inspire management innovation power is one of the important problems need to be solved of modern enterprise system, the management incentive differences will affect the effectiveness of corporate governance, which affects the efficiency of enterprise innovation. Design a reasonable salary system can effectively play on executive incentive, constrain management’s opportunistic behavior of slacking off or damage enterprise value, coordinate the principal-agent relationship, achieve the goal of incentive compatibility. Effective compensation contracts will trend the target function of executives and shareholders to be consistent, improve the sensitivity of the executive compensation and corporate performance, motivate executives to fulfil their duty, make the effort to improve the efficiency of enterprise innovation, in the pursuit of personal interests at the same time increase shareholder wealth. This paper select manufacturing and information technology listed companies as research samples, using hybrid cross section data between 2010 and2013, through empirical research methods to analyze the influence of executive compensation on the enterprise innovation efficiency.On the basis of reviewing and summarizing the existing literature at home and abroad,this paper tries to innovate in the following aspects:(1)Study the effect of executive compensation to the enterprise innovation efficiency. Existing research focus more on therelationship between executive pay and R&D spending, corporate performance, enterprise value, while focus less on executive compensation and the enterprise innovation efficiency;(2)The executive pay is subdivided into monetary compensation, equity compensation, pay structure and pay gap, from multiple dimensions to study the relationship between executive compensation and enterprise innovation efficiency with more systematic,comprehensive and detailed;(3)Study the enterprise innovation efficiency of imitation innovation and independent innovation. Increase the enterprise innovation input does not mean that bring about higher innovation benefits, individual research on innovation input or output is easy to cause deviation, in addition, the enterprise’s resources are limited, how to improve the conversion rate of resources to the enterprise management is more important.This paper integrally use innovation theory, principal-agent theory, contract theory,incentive compatibility theory, tournament theory and equity theory for theory analysis,empirically test the effect of executive compensation on the enterprise innovation efficiency, research conclusion as follows:(1)Executives’ monetary compensation and equity compensation are positively related to the enterprise innovation efficiency, relative to equity compensation, the correlation between monetary compensation and enterprise innovation efficiency is stronger. Improve the monetary compensation is recognition of executive’s ability and diligence, strengthen executive’s confidence of enterprise development for the future, motivate executives to create benefits for the enterprise. Equity compensation make executives to have enterprise residual claims, incent executives paying more attention to the long-term development of the enterprise and being committed to maximize the enterprise value, that will effectively ease the problem of executive innovation power shortage;(2)Executive equity compensation and monetary compensation ratio is positively related to the enterprise innovation efficiency. Due to the monetary compensation has the characteristic of rigid, equity compensation more flexible, therefore the greater the ratio of equity compensation and monetary compensation, shows that the higher the executive pay levels, for executive incentive effect is stronger, more conducive to improve the enterprise innovation efficiency;(3)Between different levels of executiveteam, pay gap and enterprise innovation efficiency is the nonlinear relationship of inverted U-shaped. Enterprise appropriately raise the pay gap between managers at different levels would have a strong incentive to executives, promote the internal competition of executive team, which is conducive to inspire executives’ innovation spirit, but excessive pay gap will lead to the lower level managers being dissatisfaction, contuse the enthusiasm of management work, which is not conducive to teamwork and damage the cohesion of enterprise.