The Research On The Relationship Between Executive Incentive And Firm Performance In The Perspective Of R&D Investment

In the modern shared enterprise, executive incentive as an important mechanism of corporate governance plays a very important role for the enterprise's performance and long-term development. Different incentive method and degree bring different incentive effects. So how to encourage executive to reach their full potential and reduce agency cost for maximum benefits of enterprise, has become the focus of enterprise and academic attention.Under this background, it is significant to study the effect of executive incentive on corporate performance. By sorting out and analyzing the relevant theoretical literature, we found that there is a little of research about the executive incentive affect enterprise performance, and it seems that a black box is between them. This thesis is based on the research paradigm of "executive incentive mechanism-executive behavior-economic consequences," in the perspective of corporate R&D investment, and expects to bridge the gap between executive incentive and corporate performance and studies the possible mechanism, opening the black box between executive incentive mechanism and corporate performance.This thesis, regarding Principal-agent theory, Incentive theory, human capital theory and technical innovation theory as the foundation, presents the nine basic hypothesiss about the relation between the executive incentive with the corporate performance and R&D investment, and the relation among these three factors. Using the relevant financial data and the structure data of the companies on the Growth Enterprise Market (GEM) listed from 2010 to 2014, this thesis tests the mediator effect of R&D investment between executive incentive and corporate performance, from the short-term salary incentive, executive stock ownership and implementation status of corporate equity incentive plan respectively, then constructs the model to test the hypothesis. The empirical results show that:(l)The short-term executive compensation incentive has a significant positive correlation with enterprise short-term performance and long-term performance. The higher short-term executive compensation can improve the current operating performance of the enterprise, and promote the enterprise's p is positively related to the short-long-term development. (2)The executive stock ownershiterm performance and long-term performance, but it is not significant. Therefore, the incentive effect of executive stock ownership is not as obvious and effective as the executive compensation incentive. (3) The implementation of equity incentive programs can significantly improve the short-term performance and long-term performance of the enterprise. (4) In the GEM companies, the implementation of short-term pay incentives, executive ownership and corporate equity incentive plan can promote enterprise R&D investment. (5)The R&D investment in short executive compensation incentive and corporate performance plays a partial mediator role, it shows higher executives short-term compensation can indeed improve the short-sighted of executive, which draws the interest relationship closer between executives and shareholders, and prompts executives to increase R&D investment to improve the enterprise performance.Finally, according to the conclusion of the study, this thesis presents six proposals on how to effectively motivate executives, how to promote the enterprises to increase R&D investment and how to promote the sustainable development of enterprises. At last, it points out the shortcomings of the study and the future research prospects.