Executive Compensation Stickiness, Agency Cost and R&D Manipulation Governance
SHI Fang1, NING Jinhui2, YUAN Zeming1
1. Accounting School, Tianjin University of Finance and Economics, Tianjin 300222, China; 2. School of Economics and Management, Hebei Agricultural University, Baoding, 071000, China
Abstract Taking the A-share listed companies in China from 2008 to 2020 as the research sample, this paper examines the governance effect and mechanism of executive pay stickiness on R & D manipulation. The results show that executive compensation stickiness can significantly inhibit R&D manipulation. The mechanism test indicates that the reduction of agency cost is an important channel through which executive compensation stickiness affects R&D manipulation. Further study shows that, compared with the “reward excellent-punish inferior” salary contract, the “reward excellent-reward inferior” salary contract with viscous characteristics has a significant inhibitory effect on R&D manipulation, especially the governance effect of the “reward excellent-low reward inferior” salary contract with a slight increase in executive compensation when performance decreases. In addition, it is also helpful to alleviate the negative impact of R&D manipulation on patent applications and grants, and improve the company’s future innovation output. Therefore, enterprises should pay more attention to and supervise the abnormal situation of R&D expenses, build a sticky incentive mechanism of executive compensation with “heavy reward and light punishment”, and give full play to its incentive and restraint effect in innovation investment decision-making. Relevant government departments should create a social culture and innovation environment of “heavy reward and light punishment” to alleviate the worries of innovation decision makers and participants.
2023, Vol. 40 
