Top Management Team Incentives And R&D Investment

Research and Development is not only the key factor of the realization of enterprise innovation,the increase of core competitiveness,and the improvement of performance growth,but also the effective way to promote industrial upgrading and enhance the level of social production.Simultaneously,R&D input will cause a lot of resource usage,its time-delay means the output will be deferred,its uncertainty means undispersed risk,so it should be paid much attention,and there comes the need to take measure aimed at improving enterprise R&D input level.As the core component of the company management team,top management team plays an important role in the decision-making process,and has a significant effect on R&D spending.Executive compensation is an important area of corporate governance research.How to design the executive compensation mechanism,solve the problem of agency,and raise the level of R&D of the enterprise,is an urgent problem in the field of theory and practice.Based on the tournament theory and behavior theory,this paper discusses the relationship between the pay gap of the top management team and the R&D investment of the enterprise by conducting theoretical analysis and empirical research.This paper structure is as follows:first the introduction,including the research background and object,significance of research,research framework and method,then innovation points.Followed by theoretical research,summarizing the existing theory and expounding the literatures,this paper puts forward the research hypothesis,then uses listed company data from 2007-2015,builds regression model to the impact of top management pay gap on R&D investment;and also examines the different conditions according to corporate performance pressure,growth level and major shareholder ownership.The results show that the level of pay gap,has a significant positive correlation on R&D input,supporting the tournament theory;when company has no pressure of performance,holds high growth level,or has low major shareholder shareholding proportion,the tournament theory is applicable.Then the conclusion is in view of the above summarizes,including policy advice and research prospects.The innovation is as follows:this article is based on the incentive of the whole executive team instead of individual executive,from a pay gap perspective;while previous research often focus on the linear relationship according different theory,this paper explores the actual effect of tournament theory in different situations according to the different characteristics of corporate.