The Effects Of CEO Tenure And Incentive On Enterprise Innovation

Modern enterprise separation of two rights governance characteristics gives prominence to the important position of enterprise managers in decision-making.But under the asymmetric information and incomplete contract,the interests of CEOs and shareholders are not the same.It is difficult to make CEOs to restrict themselves to choose the innovation decision.According to the theory of managerial entrenchment theory,CEOs are willing to strengthen their position and to maintain their interests though the adjustment of innovation decisions under the incentive and restraint mechanism.For them,if fired,they will suffer a huge loss,like all of the existing position welfare and honor.And it also brings adverse impact on their reputation.Therefore,it prompts CEOs to form the management entrenchment in innovation decision process.Based on the background that the innovation investment of Listed Companies in China is lagging behind,and CEOs' tenure is shortened,this thesis studies the relationship between executive tenure,incentive and corporate innovation based on the perspective of managerial entrenchment.Firstly,the thesis firstly reviews the related literature of the factors of enterprise innovation and the relationship among CEO tenure,incentive and enterprise innovation.Secondly,according to the innovation theory,high order management theory,defense theory,incentive theory and tournament theory,the thesis accounting the theoretical basis of CEO tenure,incentive and enterprise innovation.Thirdly,the thesis analyzes the China's listed company system background,and explains the differences between different types of enterprises.Then,based on the above theories,the theoretical analysis framework of the relationship among CEO tenure,incentive and enterprise innovation is put forward.After that,taking advantage of the correlation analysis,multi collinear diagnosis,multiple linear regression and so on,we explore the following three aspects: the impact of CEO tenure(including CEO actual tenure and CEO expected tenure)on enterprise innovation,the impact of political promotion on the relationship between CEO tenure and enterprise innovation in SOEs,and the impact of stock incentive on the relationship between CEO tenure and enterprise innovation in non-SOEs.Empirical results show that:(1)the relationship between CEO actual tenure and enterprise innovation takes on an inverted-U shape;(2)the relationship between CEO expected tenure and enterprise innovation takes on positive correlation;(3)political promotion plays a positive function on the of stock incentive on the relationship between CEO tenure and enterprise innovation in SOEs;(4)stock incentive plays a positive function on the of stock incentive on the relationship between CEO tenure and enterprise innovation in non-SOEs.In the end,based on the above findings,we propose the policies of taking full account of CEO tenure,improving the company's incentive mechanism,and setting up the evaluation standards of CEO innovation performance.The thesis divides CEO tenure into CEO actual tenure and CEO expected tenure,and explores the influence of CEO tenure and incentive on enterprise innovation based on the transitional economy from the aspect of managerial entrenchment.It supplements the literature of upper echelons theory,managerial entrenchment theory and incentive theory to a certain extent.It also deepens the research of CEO tenure and enterprise innovation.The results also provide evidences for selecting appropriate managers,perfecting the corporate governance mechanisms and optimizing the incentive mechanism.