Equity Incentive,Exercise Performance Conditions And Corporate Innovation Input

With the intensification of global economic and trade competition and the emergence of the motive to seek the transformation of national economic development mode and sustainable development,the innovation ability of enterprises has become more and more important and attracted wide attention.As early as the 18 th CPC National Congress,China has put forward the strategic goal of innovation-driven development.In the government work report of 2019,the government takes innovation as the next work objective,try best to enhance the ability of technical supporting ability,promote the development of new industries,and create a social atmosphere of double-creation.According to the traditional principal-agent theory,equity incentive can solve the principal-agent problem caused by the inconsistency of owner's and manager's objective functions,which makes managers pay attention to the long-term profitability and core competitiveness of enterprises.It is regarded as the main way to solve managers' shortsightedness and innovation inhibition.However,exorbitant performance objectives in equity incentive may also induce manager to cut down R&D expenditure in the short term.Then how will the different performance conditions in equity incentive affect the company's innovation ability? What kind of equity incentive scheme will have a better impact on the company's innovation ability? This is a worthwhile and important question.Different from western countries,the equity incentive design in China is a performance-based equity incentive scheme.In view of this,this paper takes the equity incentive events of all listed companies in Shanghai and Shenzhen A shares in China from 2006 to 2014 as samples,and further explores the impact of setting different target performance conditions on corporate innovation investment in equity incentive schemes.Measure the degree of innovation investment by the way of R&D expenditure compared with operate revenue and total assets,collect and control other relevant factors affecting company innovation,gradually build an empirical model of the impact of performance indicator type and indicator level on innovation investment,and on this basis,exploring the internal and external governance factors affecting the relationship between the two.The empirical results show that setting an index of revenue growth will significantly reduce the R&D expenditure of a company;Net profit growth rate higher than the average of the previous three years will significantly reduce R&D expenditure.The use of technology-oriented strategy,higher equity balance and market concentration will weaken this restraint effect.As the increase of target ROE,the R&D expenditure of the company presents an inverted U-shaped change.Based on the above conclusions,this paper puts forward the following policy suggestions: firstly,we should set up a reasonable combination of performance conditions,delicately reflect the management results of senior managers,and avoid the improper restriction of the miscellaneous index system on senior managers;secondly,we should weigh the level of performance conditions,too low to achieve incentive effect,too high will induce opportunism;finally,we should improve internal and external governance of the company.Through a good supervisory and balancing system,the managers' s speculation caused by the pressure of performance objectives can be reduced.