Executive Compensation Incentives,Overseas Background And R&D Investment Of Enterprises

R&D investment is the key to innovation of enterprises.As the makers and implementers of management objectives and programs,executives have important decision-making power over whether the enterprise should invest in R&D.Encouraging executives to invest in R&D has become the key to improving the level of innovation of enterprises.However,R&D investment has the feature of high input,high risk and lagging in earnings.Therefore,executives often lack of motivation to invest in R&D out of self-interest.Executive compensation incentives are considered to be effective incentive measures to alleviate the conflicts between principals and agents,which can also urge executives to focus on the long-term interests of enterprises.At present,China's listed companies generally adopt executive compensation,which is a short-term incentive method.With the emergence of the effectiveness of equity incentive,some enterprises have begun to attach great importance to the impact of equity incentive on executive behavior.Exploring the impact of executive compensation incentives on R&D investment in depth has positive significance for optimizing executive compensation incentives and maximizing the effectiveness of compensation incentives.Overseas background is considered to be an advantage of executives in knowledge and skills.To a certain extent,overseas background also has major impacts on executive's decision behavior.Using the compensation incentives and fully exploiting the inherent advantages of executives are key to improving the R&D investment level of enterprises.Based on principal-agent theory,social comparison theory and upper echelons theory,this paper takes the A-share listed companies in stock marketsof Shanghai and Shenzhen from 2007 to 2017 as the research objects,and uses methods such as multiple linear regression and propensity matching score,to examine the functionary mechanism of the executive compensation incentives and the overseas background in the process of R&D investment.The empirical research finds that: firstly,executive compensation can promote R&D investment.Compared with the average salary of the same industry,the higher the executive compensation is,the more R&D investment can be promoted;secondly,equity incentive can improve R&D investment.Compared with executive compensation,the incentive effect of equity incentive is more significant.At the same time,there is a complementary effect of executive compensation and equity incentive on R&D investment.That is,executive compensation can promote the incentive effect of equity incentive on R&D investment and vice versa;thirdly,the overseas background of executives has a positive impact on R&D investment.Executives from overseas would use their human capital advantages such as knowledge,skills and social networks to promote R&D investment.fourthly,compensation incentives have a positive adjustment effect on the relationship between executives' overseas background and R&D investment.The more executive compensation,salary premium and equity incentive are,the more R&D investment would be promoted by the overseas background of executives.Similarly,the incentive effect of equity incentive is more significant than that of executive compensation.The possible innovations of this paper are as follows: firstly,this paper studies the differences of impacts and complementary effects of different executive compensation incentives on R&D investment,and to some extent compensates for the shortcomings of such matters that have ignored the internal connections of different executive compensation incentives;secondly,this paper analyzes the effect mechanism of executives' overseas background on R&D investment based on the propensity score matching method,which canreflect the net effect of executives' overseas background on R&D investment;thirdly,this paper examines the adjustment effect of different executive compensation incentives on the relationship between executives' overseas background and R&D investment.Therefore,to better analyze the comprehensive influence of executive team characteristics and corporate governance factors on strategic decision-making of enterprises.The conclusions of this paper provide new analytical ideas for optimizing the compensation structure of executives and the ways of improving the level of R&D investment in the context of China's strong support and encouragement of innovation.