The Impact Of Option Incentives On Enterprise Innovation

Innovation is the first driving force for a company's development.Innovation requires management and employees' efforts.The separation of the two powers under the enterprise structure now determines that the management is risk-averse.The manager does not have the incentive to participate in venture capital.Option incentives have the advantage that traditional incentives lack.It can bound the management and the core personnel together.At the same time,the convex nature of the option contract is beneficial to the management to reduce risk aversion and promote the company's innovation activities.This paper study whether the option incentive will have an impact on the innovation activities of enterprises.This paper verifies the promotion effect of option incentive mechanism on enterprise innovation by introducing two varible,which express innovation quality and innovation quantity.The paper further analyze the impact of option contract characteristics(option value,term of validity,granting senior management ratio)on option incentives to promote innovation output.This paper selects the samples of all listed companies from 2006 to 2013.The enterprises that implement the option incentives are used as the experimental group,and the enterprises that do not implement the incentives are used as the control group.The PSM model is used to match the control team.The results show that total number of invention patents in the treat group have increased significantly,and the promotion of the number of innovations is more obvious,which proves that the option incentives have a significant role in promoting the innovation activities of enterprises.What's more,the enhancement of innovation is caused by other incentives such as cash compensation and executive holdings.This paper proves that the driving method of option incentive is to improve R&D efficiency.This paper analyzes the impact of the option contract exercise period on enterprise innovation.The paper finds that the longer the option contract exercise period,the stronger the promotion effect,and the option incentive effect in the long-term exercise period is greater than that of the enterprise with short exercise period..Similarly,this paper analyzes the impact of the number of executive incentives on corporate innovation.Empirical studies have found that the number of incentives granted to executives is significantly significant,and incentives for ordinary employees are not significant.