Research On The Impact Of Executive Incentive Strategy On Environmental Protection Investment Of Enterprises

With the "double cycle" and "double carbon" strategies written into government reports,the synergistic development of economy and environment has become inevitable,and corporate environmental investment has become a hot topic in society.Under the corporate system of separation of powers,executives may make decisions that are not in the interest of shareholders due to information asymmetry,which increases the cost of corporate proxy.As executives are the decision makers of environmental protection investment,it is important for manufacturing companies to develop scientific and effective incentive strategies to promote environmental protection investment by executives.The relationship between executive incentives and corporate environmental investment is unclear,and few scholars have noted the possible mediating role of corporate performance in the relationship between the two.Therefore,this paper places executive incentives,firm performance,and corporate environmental investment in the same framework and attempts to explore their impact relationships and mechanisms of action.First,this paper compares the existing research on executive incentives,corporate performance,and environmental investment,and identifies the research idea of this paper.Secondly,based on principal-agent theory,optimal compensation contract theory,interest convergence and trench effect hypothesis,and tournament theory,the theoretical derivation of this paper is conducted and the research hypothesis of this paper is proposed.Again,this paper selects Chinese listed manufacturing companies in Shanghai and Shenzhen A-shares from 2013 to 2020 as a study sample and uses a multiple regression model to empirically test the impact of executive incentive strategies on corporate environmental investment.Finally,the differences in the impact of executive incentive strategies on corporate environmental protection investment by different property rights nature are further analyzed.This paper finds that executive compensation incentive,equity incentive and promotion incentive are all conducive to promoting corporate environmental investment;increasing executive compensation incentive,equity incentive and promotion incentive are all conducive to improving corporate performance;and corporate performance plays a part in mediating the effect between executive incentive and corporate environmental investment.Further study found that the implicit incentive effect of state-owned enterprises is significant,while the explicit incentive effect is not significant;the explicit incentive effect of executives of non-state-owned enterprises is significant,while the implicit incentive effect is not significant.Based on the above findings,this paper suggests that manufacturing enterprises should develop executive incentive strategies that suit their actual situation and pay attention to the different roles played by executive incentives in enterprises with different property rights,so as to improve the level of environmental investment in manufacturing enterprises.The findings of this paper can alleviate the enterprise proxy issues,promote the sustainable development of enterprises,and help promote the realization of China’s environmental strategy.