Performance Expectation Gap,R&D Expansion And Quality Of Innovation

The smooth implementation of enterprise innovation activities plays a crucial role in a country’s economic growth and technological progress,and the innovation strategy decisions of enterprises are influenced by performance feedback results.Previous studies have shown that when a company is in a state of performance expectation gap,management will actively change or adjust organizational strategy to overcome this unfavorable situation,and increasing research and development investment is a common strategic adjustment behavior adopted by management in this state.However,in reality,the distribution of R&D information inside and outside the enterprise is not consistent,which inevitably leads to moral hazard and adverse selection.When a company is in a state of performance expectation gap,management is under internal and external pressure,and there will be more earnings management and fraudulent behavior.Adjusting the company’s R&D investment is an easy to manipulate and less noticeable earnings management tool for management.The common ways for management to manipulate R&D investment include: using the implicit choice of accounting policies,adjusting accounting subjects and inefficient allocation of innovative resources.Therefore,this article reasonably questions whether a company’s R&D expansion strategy is completely true under the state of performance expectation gap? Is there any speculative behavior of inflated R&D investment? What impact will this research and development manipulation behavior have on the quality of future innovation output of enterprises?Successful managers are often storytellers of excellent stories.In the event of a gap in performance expectations,management needs to provide sufficient and reasonable performance explanations to various stakeholders in the short term to maintain their own salary,position,and reputation.Based on the Impression management theory,the management prefers to attribute excellent operating performance to internal factors,while the poor operating performance to external factors,that is,the management has a self serving attribution tendency when making performance attribution.Different from the research perspective of other attribution literature,this article no longer focuses on the self-interest attribution tendency of management,but instead focuses on the interesting behavior of management attributing this "unsatisfactory" performance to internal R&D investment in the state of performance expectation gap.It is also because the increased R&D investment in the current period can damage the characteristics of the enterprise’s current performance that the R&D attribution can become a rational choice for management to shirk their own responsibilities.In summary,this article reasonably questions whether the virtual increase in R&D investment of a company stems from the demand attributed by management in R&D,if the R&D expansion strategy of the company under the state of performance expectation gap is not entirely true? What impact will this R&D attribution behavior have on the quality of future innovation output of enterprises?In order to answer the above questions,this article starts from the special market performance of performance expectation gap and links it with the R&D expansion behavior of enterprises.Using data from A-share listed companies in Shanghai and Shenzhen from 2008 to 2021 as research samples,we use the word frequency analysis method of seed word set+Word2Vec similarity word expansion to measure the R&D attribution tendency of enterprises.This paper uses fixed effect model,PSM-DID model,endogenous analysis,robustness test and heterogeneity analysis to empirically test the impact of performance expectation gap on enterprise R&D expansion behavior and future innovation quality,and reveals the avoidance behavior of management to cheat the market by manipulating R&D investment and false attribution.The research results of this article indicate that:(1)Enterprises will implement the strategy of R&D expansion under the state of performance expectation gap.The larger the performance expectation gap,the more R&D investment.(2)The R&D expansion strategy of enterprises in the state of performance expectation gap is not entirely true.The larger the performance expectation gap,the more virtual R&D investment the enterprise incurs,and the more significant the R&D manipulation.(3)The performance expectation gap state will significantly inhibit the quality of future innovation of the enterprise,bringing more inferior innovation output to the enterprise.(4)The attribution tendency of R&D can positively regulate the relationship between performance expectation gap,R&D investment,and R&D manipulation.The behavior of enterprises to inflate R&D investment stems from the demand for management’s R&D attribution.(5)In the state of performance expectation gap,R&D attribution tendency significantly suppresses the quality of future innovation of enterprises.The empirical results of this paper provide a new perspective for the study of organizational behavior under the state of performance expectation gap,and reveal the more secretive earnings management mode of enterprises and the text processing behavior of enterprises in performance attribution.The research conclusion of this article has strong reference significance for improving China’s innovation incentive policies and the information disclosure system of enterprises.