Managerial Discretion?R&D Investment And Firm Performance: Evidence From China's Manufacturing Listed Companies

At present,economic situation is so severe and the external market competition is so fierce.The science and technology constitute as the primary productive force can improve present economic situation and accelerate economic growth.Therefore,all countries continue to increase R&D investment intensity each year.The corporate as the most important body should pay more attention to the R&D investment,which is a critical business problem for the corporate.General manager or CEO as the leader of the corporate,plays a decisive role in the business activity.Of course,he or she will have an impact on R&D investment and R&D implement performance.And the corporate affect the behaviors of general manager thorough giving different size of managerial discretion.The managerial discretion is the independent action space.It not only can stimulate the managers' work enthusiasm,but also can lead to more agency costs.R&D investment activities with a high risk investment lead to more principal-agent problems,hindering the effective implementation of the R&D activities.How to give the general managers enough discretion,which can make the managers pay more attention to the R&D investment,lower the agency costs in the process of R&D activities.Improve resource utilization,improve the performance of the enterprise finally.It is worthy of study.Therefore,this paper use Chinese listed manufacturing firm's data which from year 2011 to year 2014,to study the effect of managerial discretion on the relationship between R & D investment and the firm performance.Firstly,the paper reviewed the documents of the measure of the managerial discretion,the effect of the managerial discretion,the relationship between the R&D investment and the firm performance and the factors which will influence the relationship between the R&D investment and the firm performance.Then,giving the hypothesis of this paper based on the Schumpeter's innovation theory and principal-agent theory.At last,to verify the hypothesis of this paper,the author collected the data,built the model and carried out the empirical study using multivariate regression.The regression results show that:(1)R&D investment and enterprise performance have significant positive correlation,which shows that R&D investment will be beneficial to the improvement of the firm performance.(2)The managerial discretion have negative moderating effect on the relationship between the R&D investment and the firm performance,which shows managerial discretion will weaken the R&D investment's positive effect on firm performance.Because the managerial discretion increases the agency cost between the shareholders and managers in the process of R&D activities,reduces the allocative efficiency of R&D resources.(3)Under different ownership nature,the managerial discretion have different effect on the relationship between the R&D investment and the firm performance.In state-owned listed manufacturing companies,the managerial discretion has negative moderating effect on the relationship between the R&D investment and the firm performance,but it doesn't have in the non-state-owned listed manufacturing companies.Finally,this paper put forward four recommendations based on the results of the regression:(1)Manufacturing enterprises should increase R&D investment intensity.(2)When the enterprises give the general managers big managerial discretion,we should strengthen the supervision of the managers' behavior,especially in state-owned enterprises.(3)Improve the company's governance and internal supervision system.(4)Establishing a sound manager market to constraint managers' opportunistic behavior.