Executive Compensation Gap,Ownership Property And R&D Investment

Innovation is the driving force for the progress of the world,the embodiment of human ability and an effective way to enhance the competitiveness of enterprises.The results of innovation largely depend on R&D investment intensity.The current R&D intensity in China is increasing year by year,but only to achieve the basic survival line.It’s imperative to enhance R&D intensity.The existing domestic and foreign researches are discussed from the internal characteristics,governance mechanism,management characteristics and the external economic environment,but less on the effect of executive pay,especially the pay gap on R&D intensity.Compensation incentive has long been a common incentive measure for enterprises and has a great influence on employee behavior.The important role of the top management team on the value of the enterprise has become a hot topic since 1980s when "upper echelons theory" was put forward.Along with the theory,the executive team pay research came into being in both domestic and foreign countries.But the research of executive compensation in our country is mainly focused on the effect of compensation level on performance while the pay gap research is still in the initial stage.This thesis expanded the field of R&D research based on the previous research results about the salary gap between the executive team.Through the analysis of the principal agent theory,information asymmetry theory,tournament theory and equity theory,this thesis studied the influence of top management team’s internal pay gap and external compensation gap on R&D intensity.For further study,how would the interaction between the internal and external compensation gap and ownership property affect the R&D intensity has been discussed.This thesis first defined the basic concepts of R&D intensity,internal salary gap and external salary gap.Then it elaborated the theoretical basis of this thesis——the principal-agent theory,information asymmetry theory,organizational justice theory,tournament theory and social equity theory.Later summarized the domestic and foreign research results on the R&D intensity and pay gap.On this basis,the thesis proposed the research hypothesis and introduced the measurement method of the relevant variables.Based on the China’s A share listing companies which disclosed the R&D investment data as samples from 2010 to 2015,through the sub sample regression and multiple linear regression,the thesis first tested whether the internal and external pay gap affected R&D investment.Then it tested how would the interaction between internal and external pay gap affect the R&D investment.Last the thesis made sub sample regression according to the ownership property aimed at testing whether it had different effects between state owned enterprises and private enterprises.The study found that:(1)The top management team’s pay gap has a significant positive impact on R&D investment in the listed companies in China;(2)The top management external pay gap has a significant negative impact on R&D investment in the listed companies in China;(3)the interaction between top management team’s pay gap and external pay gap has a positive effect on R&D investment;(4)The private companies have a stronger effect on the R&D investment than state-owned companies.This thesis has two innovative points:(1)Different from the previous research on the absolute value of executive compensation,this thesis studied the executives’internal and external pay gap on the R&D intensity from the perspective of the relative gap and took into account the interaction between them and the impact of property rights on the relationship.The thesis provided a new perspective to analyze the motivation of enterprises to carry out innovative R&D activities by incorporating different.characteristics of the industry into the scope of compensation design;(2)This thesis concluded that both the internal and external pay gap had significant effects on R&D investment.Different effects could be produced under different constraint conditions.This result provided a reference for the enterprise to remunerate salary policy according to the changes of external conditions.It’s benefit for improving the level of R&D investment in listing corporations and further enhancing our ability of independent innovation.