Political Promotion Incentive And Firm Performance

Political promotion incentive was applied to the official promotion research field initially.Due to state-owned enterprise executive's double identity of being government officials as well as business executives,scholars applied it to the study of state-owned enterprise executive's incentive research and explored the relationship of political promotion incentive,enterprise behavior and enterprise performance from the perspective of implicit motivation.Up till now,there is a controversy on the study of the relationship between political promotion incentive and enterprise performance.Some scholars indicate that executives of state-owned enterprises will take the M&A and diversification strategy to improve the company performance under the influence of political promotion incentive.However,another part of scholars believes that executives of state-owned enterprises will take over-investment behavior and social image project and social donation under the influence of political promotion incentive,which goes against enterprise performance.Earnings management and R&D investment can bring about distinct impact on the short-term performance and long-term development of enterprise.In the background of short-term assessment,the state-owned enterprise executives will take what kind of earnings management and R&D investment behavior under the influence of political promotion incentive?What influence will it bring to the enterprise performance?In addition,the incentive systems of state-owned enterprises executives consist of explicit and implicit incentive mechanism.So how will explicit incentive affect the relationship between the political promotion incentive and state-owned enterprises executive's management behavior?The existing research has not given a good explanation for the above problems.This paper speculates that earnings management and R&D investment play a partially mediating role between the political promotion incentive and enterprise performance,and explicit incentive factors have significant influence on the relationship between the political promotion incentive and state-owned enterprises executive's management behavior,such as earnings management and R&D investment.Based on the above analysis,this paper aims to study the relationship among political promotion incentive,earnings management,R&D investment,enterprise performance and stock option incentive.In order to explore the influence path from the executive incentive to the enterprise performance,this article firstly combs the literature of political promotion incentive,earnings management,R&D investment and enterprise performance,defines the concept and measurement method of variable,thus lays the theory foundation for the subsequent deduction political promotion incentive,earnings management,R&D investment and enterprise performance.Secondly,this paper deduces the hypothesis from the perspective of the Promotion championship theory.Finally,this paper takes the 457 state-owned Enterprises of the stock markets of Shanghai and Shenzhen as the research object,obtains 1658 sample data by hand or database,and uses Stata14.0 to carry on the empirical analysis.Through empirical analysis,this paper draws the following conclusions:(1)The Political promotion incentive urges the State-owned enterprise executive to promote the enterprise performance positively,(2)The Political promotion incentive urges the executive to raise the earnings management positively;(3)The Political promotion incentive urges the State-owned enterprise executive to reduce the enterprise R&D investment level;(4)Earnings management plays a partially mediating role between the political promotion incentive and the enterprise performance.(5)R&D investment plays a partially mediating role between the political promotion incentive and the enterprise performance;(6)The equity incentive strengthens the positive correlation between the executive political promotion incentive and Da in state-owned enterprises;(7)The equity incentive weakens the positive correlation between the executive political promotion incentive and Rem in state-owned enterprises;(8)The equity incentive weakens the negative correlation between executive political promotion incentive and R&D investment in state-owned enterprises.This paper adopts the theoretical deduction method to building complete path analysis of among enterprise management motivation,behavior of enterprise executives and enterprise performance,and has verified that the earnings management and R&D investment play a partially role between the political promotion incentive and enterprise performance,which has a certain significance of theoretical innovation.In addition,based on the dual incentive perspective of explicit incentive and implicit incentive,this paper has verified that the equity incentive influences the relationship between the political promotion incentive and earnings management as well as political promotion incentive and R&D investment,which enriches the research of the relationship between executive incentive and behavior of enterprise executives.Finally,this study found that the executives of state-owned enterprises will take actions to enhance the level of earnings management that is a short-sighted behavior and reduce R&D investment to avoid enterprise operation risk under the influence of political promotion incentive,which provides reference for government executives when they formulate the operating goals and assess the operating results for state-owned enterprise,which has practical significance and value.