Managerial Incentive Structure,Free Cash Flow And Enterprise R&D Investment

As the main body of R&D innovation,enterprises are an important part of the country to achieve innovation and development.The improvement of R&D investment in enterprises will enhance the overall national innovation strength and international competitiveness.And whether the increase or otherwise of the enterprise's innovation investment should be implemented in the executive power of the management,so what measures can be taken to improve the management's enthusiasm for R&D is the urgent problem that modern enterprises need to solve.At the same time,the level of financial risk on R&D activities is far more than other investment activities,enterprises should prepare adequate free cash flow to reduce the risk of funds.Based on the theory of principal-agent and free cash flow,this paper analyzes the influence of free cash flow and managerial incentive structure on the innovation input of the enterprise,and further combs the relationship between free cash flow,management incentive structure and enterprise R&D investment.This paper selects non-financial listed companies,which were disclosed in 2011-2016,as the research object.Through empirical research methods to analyze the influence of free cash flow and managerial incentive structure on the innovation input of the enterprise and the influence of free cash flow on the relationship between Managerial incentive structure and R&D investment.The main conclusions of this paper are as follows:(1)Free cash flow has a significant positive effect in promoting corporate R&D investment.When the free cash flow of the firm increases,the amount of funds invested in R&D projects will increase accordingly.(2)The incentive structure of management has a significant impact on R&D investment.Specifically,As the ratio of equity pay to total remuneration increases,the management will pay more attention to the R&D investment which can increase long-term interests of the enterprises.(3)Free cash flow has different influences on the relationship between managerial incentive structure and the corporate R&D investment.That is,at the higher level of free cash flow,the influence of managerial incentive structure on R&D investment will be enhanced.At the lower level of free cash flow,the influence of managerial incentive structure on R&D investment is not obvious.The main contributions of this paper are:Firstly,the research perspective is novel.This paper examines the impact of different levels of free cash flow on the relationship between managerial incentive structure and corporate R&D investment from the perspective of the free cash flow level of listed companies.The existing research level has been expanded,and the research conclusion of the relationship between management incentive and enterprise R&D has been instructed for practice.Secondly,expand the research results in the field of managerial incentives and enterprise research and development.On the basis of researching the relationship between managerial incentives and enterprise R&D investment,this paper further examines the impact of incentive structure on R&D investment and deepens the understanding of the relationship between managerial incentives and enterprise R&D activities.