Corporate Financialization,Equity Incentive And Innovative Investment

Since the beginning of reform and opening up,China has shown more and more comprehensive strength under the background of economic globalization,and it is a shining new star.With the steady growth of China’s GDP,the country is more and more prosperous,and more attention is paid to the development of soft power.China’s scientific and technological innovation ushered in the spring.At the same time,China is a strong manufacturing economy.The strength of scientific and technological innovation is constantly improving,and has made proud achievements at home and abroad.As we all know,every country in the world is strengthening the enhancement of scientific and technological strength,and the competition of soft power among countries is becoming more and more fierce.Even though our country’s science and technology has made proud achievements,our government still needs to face up to the situation that our enterprises are now facing internal and external troubles.The essence of science and technology is innovation,and R&D investment is the most important connotation of enterprise innovation investment activities,so innovation investment is the key way to accelerate the transformation of enterprises in China.With the deepening of financialization,finance and human activities are closely intertwined,and have been integrated into people’s daily life.Finance plays a very important role in economic growth.It can eliminate the frictions of real economy and change the incentives and constraints of economy,thus changing the mode of savings,investment and innovation,and ultimately affecting economic growth.In fact,the academic circles have different opinions on the role of Finance in economic growth.What role will this industry,which is vital to the national economy,play in China’s real economy? There is no doubt that the development of enterprises can not be separated from the financial market,but when financialization has a positive impact on enterprises,it will also have a negative impact.Investment in financial assets is the embodiment of most enterprises’ direct participation in financial activities at present.Compared with traditional investment methods,financial investment gains higher returns,which leads to the flow of funds to the financial market for companies to invest in operation.However,the innovation investment of enterprises from R&D to mass production of products consumes a lot of capital cost and time cost,which leads to the loss of profit sources of enterprises.It relies on the income generated by the main business and more from the investment income of financial products,which will inevitably affect the R&D and innovation investment of enterprises,that is,the company’s financialization weakens the innovation investment of enterprises,thus the phenomenon of "getting rid of the real to the empty".With the emergence of the separation of the two powers,although the problem of the owner’s dual identity has been solved,some agency contradictions will inevitably arise.In order to satisfy their desire for high returns,agents often make decisions that are contrary to the company’s economic interests.Generally speaking,enterprises need to invest high costs in R&D products,not only the process is long,but also the R&D results may fail.However,the technological innovation of enterprises determines the core competitiveness of the company’s development,and is also the future direction of the company’s main business.On the contrary,financial investment earnings are high,easy to decorate financial statements and highlight the performance of agents,and easier to obtain short-term returns quickly.Since the 11 th Five-Year Plan,many listed companies have actively implemented the equity incentive mechanism in response to the call of the national government,hoping to reduce the opportunism of agents through equity incentives and improve the value of enterprises.In actual governance,enterprises adopt equity incentive method to reconcile the contradiction between financial investment and innovative investment between principals and agents,but what impact does equity incentive have on the relationship between corporate financialization and innovative investment?Although there are abundant studies on corporate financialization,equity incentives and innovative investment,there are few studies on corporate financialization and innovative investment.However,there are fewer studies on the perspective of increasing equity incentives on this basis.Therefore,based on the current hot topics of corporate financialization and innovative investment,through theoretical analysis of corporate financialization,equity incentives and innovative investment,this paper studies the following questions:(1)Will corporate financialization have crowding-out effect on innovative investment?(2)What impact will the implementation of equity incentives have on the relationship between corporate financialization and innovative investment?This paper is mainly divided into six parts.The first part is the introduction.This part mainly introduces the background and significance of this study,research ideas and methods,as well as the innovation and shortcomings of this paper.The second part is literature review.This part reviews the relevant research on corporate financialization,equity incentives and innovative investment,and summarizes the research results of these documents.The third part is a theoretical overview of the relationship among corporate financialization,equity incentives and innovative investment.This part first defines the concepts of corporate financialization,equity incentive and innovative investment,then explores the mechanism of the three relationships,and finally elaborates the theoretical basis of this study.The fourth part is the hypothesis of the relationship between corporate financialization,equity incentive and innovation investment.The fifth part is about the empirical test of corporate financialization,equity incentives and innovative investment.This part first introduces the selection of samples and the sources of data,followed by the definition of variables and the construction of research models,and finally the empirical analysis of corporate financialization,equity incentives and innovative investment.The sixth part is about the conclusions and suggestions of this study.This section elaborates the conclusions of this study in detail,and puts forward relevant suggestions on promoting the development of Finance and innovation investment from many aspects.Based on the sample of A-share non-financial listed companies in Shanghai and Shenzhen Stock Exchanges from 2008 to 2017,this paper empirically tests the impact of corporate financialization on innovation investment and the regulatory role of equity incentives through multiple regression models,draws conclusions and puts forward suggestions for the process of corporate financialization in China.Empirical research results show that: on the whole,corporate financialization in China will have crowding-out effect on innovation investment,equity incentive will weaken the crowding-out effect of corporate financialization on innovation investment,and the crowding-out effect is different in the manifestation of transaction financial assets and investment financial assets.At the same time,for financial assets with different motivations,the implementation of equity incentives will weaken the crowding-out effect of corporate financialization and innovation investment,but the effect is different.