An Empirical Study On Abnormal Executive Compensation And Enterprise Technological Innovation

Over the last 4 decades of reform and opening up,China's economic development is advancing by leaps and bounds,and its economic achievements have attracted worldwide attention,becoming the second largest economy in the world.Undoubtedly,the steady promotion of macro-economy can not be separated from the development and growth of micro-enterprises.As the institutional guarantee for the healthy growth of micro-enterprises,corporate governance is of great importance.Effective contract design can incorporate incentive and constraint factors into agent's utility function at the same time,and achieve the goal of convergence of agent's utility function and client's utility function.In recent years,the ever-increasing abnormal executive compensation has attracted great attention from scholars and governments around the world.Scholars have explored the influencing factors and economic consequences of abnormal executive compensation from different dimensions,and formed two viewpoints of "efficient contract hypothesis" and "managerial power hypothesis".At the same time,the government has begun to deliver policies to limit the abnormal pay of executives.So,does the emergence of executive abnormal compensation mean that the theory of effective contract is out of date? This is not only the important research background of this paper,but also the most important and hot topic in modern corporate governance.This paper starts from the current phenomenon of abnormal executive compensation,which is highly concerned by all sectors of society.Under the framework of "efficient contract hypothesis" and "managerial power hypothesis",this paper empirically examines the economic consequences of abnormal executive compensation from the perspective of enterprise technological innovation,taking China's A-share non-financial listed companies from 2007 to 2016 as samples.It finds :(1)abnormal executive compensation significantly promotes technological innovation and supports the view of contract validity?These conclusions still hold when conducting a series of robust checks of replacing the explanatory variables,replacing the explanatory variables,considering the hysteresis of the innovation output and exclude alternative hypothesis;(2)through the mediation effect test,it is found that abnormal executive compensation promotes the technological innovation of the enterprise by increasing the risk-taking,and risk-taking is part of the mediating factor that abnormal executive compensation affects the technological innovation of enterprises;(3)after distinguishing the nature of property rights,it is found that compared with state-owned enterprises,the effect of abnormal executive compensation on technological innovation is more significant in private enterprises.Further exploration finds that the role of abnormal executive compensation in enterprise technology innovation is not completely ineffective in state-owned enterprises.Compared with central state-owned enterprises,local state-owned enterprises have shown significant promotion,indicating that even with state-owned property rights,different levels can also make a huge difference;(4)compared with enterprises with lower degree of competition in the product market,enterprises with high degree of competition in the product market,abnormal executive compensation has a more significant effect on technological innovation of enterprises;(5)when measuring the technological innovation of enterprises by the total number of patent applications,it is found that the marketization does not play a significant regulatory role.Further analysis found that the higher marketization is conducive to adjusting the impact of abnormal executive compensation on enterprises applying for invention patents,reflecting the true talents of executives,which is a substantial innovation;however,the lower marketization leads to the "face project" of executives,which is a strategic innovation.Therefore,after the executives get abnormal compensation,different marketization will have an impact on the innovation choice of enterprises.This paper provides a new idea for improving corporate governance mechanism,and also provides a useful reference for policy makers.