Cognition Of Director,R&D Expenditures And Firm Performance

Enterprise operation depends on corporate governance.The effective corporate governance can promote enterprise to pursue not only short-term output but also long-term production,so that enterprises can establish the investment mechanism that guarantees the normal operation of the system and plays the expected function and realize the sustainable development of enterprises.Directors at the core of corporate governance are one of the key decision makers and supervisors.They naturally have the opportunity and the obligation to actively participate in innovation activities of enterprise,promote them to healthily operate in the framework of enterprise,and promote the transformation and upgrading and long-term development of the enterprise.Thereinto,the investment of R&D expenditures is the key part of enterprises to carry out innovation activities: On the one hand,the enterprise needs to give enough money to support research and development activities,but management is often based on the consideration of risks and benefits and then pursues of short-term interests and chooses to reduce or delay the investment of R&D expenditures to carry out real earnings management;On the other hand,due to the high investment and the complexity of innovation activities,enterprises will have problems that managers have the opportunity to dominate enterprise free cash to seek personal gain for themselves due to regulatory loopholes resulting in a decline in the efficiency of the R&D expenditures.So,how can the company play the role of director in the process of the governance in the R&D expenditures to promote the management to provide sufficient financial support for innovation activities and to veritably input R&D expenditures in the innovation activities? In the process of decision-making and supervision of innovation activities,director is not unlimited rational economic people.In the perspective of cognitive psychology,director is based on the knowledge of his past experience to selectively filter the information,form his own understanding after analyzing and processing complex information,make that the basis of the judgment and decision making and then guide his corresponding decisions.Influenced by his cognition,director of the individual with different cognition would take different decision-making behavior in the enterprise innovation activities.And individual cognition can be measured by observable variables such as professional background.Starting from the current innovation environment and focusing on the important sources of enterprise innovation--R&D expenditures,the six basic assumptions of this paper are put forward.It is approved by the empirical that cognition which is formed by technology professional experience helps guide the directors to reduce the behavior of Management's reduction or postponement of R&D expenditures.The cognition which is formed by financial professional experience help directors appointed the audit committee members to play a role of supervision of R&D expenditures and improvement of the efficiency of R&D expenditures,so as to promote enterprise performance improvement.The innovation point of this paper is that:(1)From the perspective of cognition,it deeply analyzes that the governance behaviors of directors in the innovation activities,which has certain guiding value for the integration of innovation activities into the corporate governance framework;(2)This paper analyzes the shortsightedness or opportunism behaviors that may appear in the process of R&D expenditures input,and puts forward corresponding measures.