Research On The Correlation Of Institutional Investor Shareholding Executive Compensation And Corporate Innovation

The scale of Chinese institutional investors is getting larger and larger,and they have become the backbone of the capital market.At the same time,whether institutional investors promote or hinder innovation has also been the focus of academic attention.This article selects Shanghai and Shenzhen A-share listed companies from 2007 to 2016 as a research sample to explore the relationship between institutional investor holdings,executive compensation and corporate innovation.Taking Kangyuan Pharmaceutical as an example,it explores institutional investor holdings in depth.The specific impact of stocks on corporate innovation.Through empirical research,it is found that the proportion of institutional investors'shareholding is negatively related to corporate innovation,and there is a one-way causal relationship,that is,the larger the proportion of institutional investors' shareholding,the more unfavorable is corporate innovation.The proportion of institutional investors holding shares is signif-icantly positively correlated with the executive compensation structure.The implementation of equity incentives for executives will weaken the role of institutional investors in holding down the original barrier to corporate innovation.The executive compensation structure and innovation have a U-shaped relationship,that is,when the executives' equity compensation ratio is within a certain range,the larger the executives'shareholding ratio,the equity incentive has a significant negative effect on corporate innovation.However,once the shareholding ratio exceeds the threshold,the positive effect of the convergence of interests dominates,and equity incentives will stimulate the enthusiasm of enterprises for innovation.At the same time,Kangyuan Pharmaceutical was selected for case analysis to deeply explore the aspects of institutional investors' shareholding affecting corporate innovation.Analyzing the innovation capability of Kangyuan Pharmaceutical from the four aspects of R&D input scale,innovation output efficiency,financial and non-financial performance indicators,the analysis found that while the proportion of institutional investors in Kangyuan Pharmaceutical declined,the company's innovation ability was constantly improved.At the same time,it also analyzes that Kangyuan Pharmaceutical's incentives for executives to shareholding will weaken the institutional investors' holding effect on innovation and the degree of weakeningThrough analysis and conclusions,it can be found that executive equity incentives can effectively alleviate the inhibitory effect of institutional investor's shareholding on corporate innovation.In order to improve the innovation ability of listed companies in China,several suggestions are made:Institutional investors should focus on enterprises Long-term value mining,and strengthen the motivation to participate in corporate governance;enterprises should increase the emphasis on human capital,attach importance to the management of equity incentives for executives,change the company's performance indicators as the sole criterion for evaluating managers' capabilities,and effectively enhance the sense of innovation.Create a relaxed and innovative atmosphere.