Executive Compensation Gap,Managers' Risk Preference And Corporate Innovation

Innovation is the main theme of our time.President Xi Jinping also emphasized in the report of the 19 th National Congress of the CPC that innovation is the primary driving force for development.As an important means for sustainable development of enterprises,innovation can bring new technologies and new products to enterprises,create more value for enterprises,and improve their competitiveness in the market.The executive team as the helm of the enterprise is the decision maker of the enterprise's innovation activities,and the decisions it makes are directly related to the business performance of the enterprise.Due to the agency conflict caused by the separation of the two powers within the enterprise,the interests of executives and shareholders are not the same.Therefore,the design of a reasonable incentive mechanism for executive compensation will have a huge impact on corporate innovation.At the same time,since the decisions of corporate managers will be affected by their own personal characteristics,this paper also introduces the risk preference variables of managers,and attempts to examine the relationship between executive compensation gaps,manager risk preferences and corporate innovation from the perspective of executives.This article sorts out relevant literature on the factors affecting corporate innovation,the relationship between pay gaps and corporate innovation,and managerial risk appetite.Based on the principal-agent theory,tournament theory,incentive theory,risk appetite theory,and high-level echelon theory,a theoretical analysis framework of executive pay gap,manager risk appetite,and corporate innovation is constructed.Based on this,the relationship between executive compensation gap and corporate innovation,managerial risk appetite and corporate innovation is empirically examined,and the adjustment of managerial risk appetite in the relationship between executive pay gap and corporate innovation is further explored.This article takes China's GEM listed companies from 2012 to 2017 as a research sample and uses the principal component analysis method.From the personal level and the company level,indicators such as gender,age,education level,shareholding ratio,current ratio,quick ratio,equity ratio,risk asset ratio,long-term asset fit ratio,cash ratio,and asset-liability ratio are selected to construct a risk appraisal system for managers.Based on the risk appetite indicators of managers,the sample companies are empirically tested.The study found that the larger the salary gap among executives,the more it can promote corporate innovation;the risk appetite of managers has a significant positive correlation with corporate innovation;managers' risk appetite has significantly strengthened the positive impact of executive compensation gaps on corporate innovation.This article enriches the research on executive pay gaps and corporate decision-making behaviors.It also introduces managers' risk appetite factors,incorporates managerial irrationality into the analysis category,broadens research perspectives on corporate innovation,and provides incentive mechanisms for executives and innovative activities.After further distinguishing the nature of property rights,this paper finds that compared with state-owned enterprises,the non-state-owned enterprises 'executive pay gap and managers' risk appetite have a more obvious positive effect on corporate innovation.The paper has 2figures,21 tables and 160 references.