310
Views
0
CrossRef citations to date
0
Altmetric
Regular Articles

Executive Compensation Incentives and Corporate R&D Investments: An Analysis Based on the Moderating Effect of Managerial Power

, , , &

References

  • Adams, J. S. 1965. Inequity in social exchange. New York: Academic Press.
  • Adams, R. B., H. Almeida, and D. Ferreira. 2005. Powerful CEOs and their impact on corporate performance. The Review of Financial Studies 18 (4):1403–32. doi:10.1093/rfs/hhi030.
  • Adithipyangkul, P., I. Alon, and T. Zhang. 2011. Executive perks: Compensation and corporate performance in China. Asia Pacific Journal of Management 28 (2):401–25. doi:10.1007/s10490-009-9162-3.
  • Allen, M. P. 1981. Managerial power and tenure in the large corporation. Social Forces 60 (2):482–94. doi:10.2307/2578446.
  • Barker, V. L., and G. C. Mueller. 2002. CEO characteristics and firm R&D spending. Management Science 48 (6):782–801. doi:10.1287/mnsc.48.6.782.187.
  • Battisti, E., N. Nirino, E. Leonidou, and A. Thrassou. 2022. Corporate venture capital and CSR performance: An extended resource based view’s perspective. Journal of Business Research 139 (2):1058–66. doi:10.1016/j.jbusres.2021.10.054.
  • Baxamusa, M. 2011. How well do market timing, catering, and classical theories explain corporate decisions? Journal of Financial Research 34 (2):217–39. doi:10.1111/j.1475-6803.2011.01289.x.
  • Bebchuk, L. A., and J. M. Fried. 2003. Executive compensation as an agency problem. Journal of Economic Perspectives 17 (3):71–92. doi:10.1257/089533003769204362.
  • Bebchuk, L. A., J. M. Fried, and D. I. Walker. 2002. Managerial power and rent extraction in the design of executive compensation. The University of Chicago Law Review 69 (3):751–846. doi:10.2307/1600632.
  • Cao, Y., and X. Zhan. 2003. The present situation and development of encouragement theories. Contemporary Finance & Economics 12:57–61.
  • Chen, D., and Y. Chen. 2011. Ownership concentration, equity balance degree and the corporate performance: 2007-2009 small and medium-sized enterprises empirical test. Accounting Research 1:38–43.
  • Chen, D. H., X. Y. Cheng, and H. L. Wang. 2005. Regulation and non-pecuniary compensation in Chinese SOEs. Economic Research Journal 2:92–101.
  • Cheng, S. 2004. R&D expenditures and CEO compensation. The Accounting Review 79 (2):305–28. doi:10.2308/accr.2004.79.2.305.
  • Chen, D., S. Liang, and D. Jiang. 2010. Costs and choices of executive incentive contracts under different marketization processes: Monetary salary and on-the-job consumption. Accounting Research 31 (11):56–64.
  • Chung, K. H., P. Wright, and B. Kedia. 2003. Corporate governance and market valuation of capital and R&D investments. Review of Financial Economics 12 (2):161–72. doi:10.1016/S1058-3300(02)00063-0.
  • Currim, I. S., J. Lim, and J. W. Kim. 2012. You get what you pay for: The effect of top executives’ compensation on advertising and R&D spending decisions and stock market return. Journal of Marketing 76 (5):33–48. doi:10.1509/jm.11.0225.
  • Cyert, R. M., S. H. Kang, and P. Kumar. 2002. Corporate governance, takeovers and top-management compensation: Theory and evidence. Management Science 48 (4):453–69. doi:10.1287/mnsc.48.4.453.205.
  • Dai, B., X. Liu, and Y. Hao. 2011. Senior executive power, salary contract and state-owned enterprise reform: Empirical research from state-owned listed companies. Modern Economic Science 4:90–98.
  • Dechow, P. M., and R. G. Sloan. 1991. Executive incentives and the horizon problem: An empirical investigation. Journal of Accounting and Economics 14 (1):51–89. doi:10.1016/0167-7187(91)90058-S.
  • Fang, J. 2012. Excessive remuneration of senior management and corporate governance decisions. Management World 28 (11):144–55.
  • Fang, J. X. 2011. Asymmetrical power of executives and corporate salary changes. Economic Research Journal 57 (4):107–20.
  • Finkelstein, S. 1992. Power in top management teams: Dimensions, measurement, and validation. Academy of Management Journal 35 (3):505–38. doi:10.2307/256485.
  • Finkelstein, S., and D. C. Hambrick. 1990. Top-management-team tenure and organizational outcomes: The moderating role of managerial discretion. Administrative Science Quarterly 35 (3):484–503. doi:10.2307/2393314.
  • Francis, B., I. Hasan, and Z. Sharma. 2011. Incentives and innovation: Evidence from CEO compensation contracts. Bank of Finland Research Discussion Paper No. 17/2011. Available at SSRN. https://ssrn.com/abstract=1953947
  • Fredrickson, J. W., A. Davis-Blake, and W. G. Sanders. 2010. Sharing the wealth: Social comparisons and pay dispersion in the CEO’s Top Team. Strategic Management Journal 31 (10):1031–53. doi:10.1002/smj.848.
  • Fu, Y., and X. Wang. 2013. The nature of ownership, monetary compensation of executives and on-the-job consumption: From the perspective of management power. China Industrial Economics 31 (12):104–16.
  • Gnyawali, D. R., E. H. Offstein, and R. S. Lau. 2008. The impact of the CEO pay gap on firm competitive behavior. Group & Organization Management 33 (4):453–84. doi:10.1177/1059601108321637.
  • Grundy, B. D., and H. Li. 2010. Investor sentiment, executive compensation, and corporate investment. Journal of Banking & Finance 34 (10):2439–49. doi:10.1016/j.jbankfin.2010.03.020.
  • Gu, F., L. Zhang, and F. Y. Zhang. 2018. Life cycle, executive compensation incentive and enterprise innovation investment-empirical evidence from the gem listed companies. Journal of Zhongnan University of Economics and Law 1:146–56.
  • Guay, W. R. 1999. The sensitivity of CEO wealth to equity risk: An analysis of the magnitude and determinants. Journal of Financial Economics 53 (1):43–71. doi:10.1016/S0304-405X(99)00016-1.
  • Hart, O. 2001. Financial contracting. Journal of Economic Literature 39 (4):1079–100. doi:10.1257/jel.39.4.1079.
  • Henderson, M. T., and J. C. Spindler. 2005. Corporate heroin: A defense of perks, executive loans, and conspicuous consumption. The Georgetown Law Journal 93 (6):1835–84.
  • Huang, J. L., and K. W. Li. 2013. Eat-drink, corruption and firm’s purchase order. Economic Research Journal 48 (6):71–84.
  • James, S. A., A. C. Rebel, and J. W. Lin. 2000. Agency costs and ownership structure. The Journal of Finance 55 (1):81–106.
  • Jensen, M. C., and W. H. Meckling. 1976. Theory of the firm: Managerial behavior, agency costs ownership structure. Journal of Financial Economics 3 (4):305–60. doi:10.1016/0304-405X(76)90026-X.
  • Jones, G. R., and C. W. L. Hill. 1988. Transaction cost analysis of strategy−structure choice. Strategic Management Journal 9 (2):159–72. doi:10.1002/smj.4250090206.
  • Kini, O., and R. Williams. 2012. Tournament incentives, firm risk, and corporate policies. Journal of Financial Economics 103 (2):350–76. doi:10.1016/j.jfineco.2011.09.005.
  • Le, S. A., B. Walters, and M. Kroll. 2006. The moderating effects of external monitors on the relationship between R&D spending and firm performance. Journal of Business Research 59 (2):278–87.
  • Levin, R. C., A. K. Klevorick, and R. R. Nelson. 1987. Appropriating the returns from industrial R&D. Brookings Papers on Economic Activity 18 (3):783–832.
  • Li, W. A., X. G. Liu, and J. H. Chen. 2010. Managerial talents, corporate governance and contract reference points: Theoretical and empirical analysis of determinants of executive compensation in Chinese listed companies. Nankai Business Review 13 (2):4–15.
  • Li, X. R., and R. J. Zhang. 2014. Equity incentives influence risk-taking: Agency cost or risk averse? Accounting Research 315 (1):57–63.
  • Lin, J., Y. An, and Z. Dong. 2021. The dark side of strengthened minority voting power: An innovation perspective. Journal of Business Finance & Accounting. doi:10.1111/jbfa.12658.
  • Liu, W., and X. Liu. 2007. A study on the effects of corporate governance on firm’s information technology input. Science & Technology Progress and Policy 24 (2):93–95.
  • Lu, R. 2007. Managerial power, compensation gap and performance. South China Journal of Economics 7:60–70.
  • Lu, R. 2014. Enterprise innovation investment and sensitivity of executive compensation performance. Accounting Research 35 (10):36–42.
  • Lu, R., M. H. Wei, and W. J. Li. 2008. Managerial power, perquisite consumption and performance of property right: Evidence from Chinese listed companies. Nankai Business Review 5:85–92.
  • Lu, X. W., Y. Sheng, and J. X. Wang. 2020. The influence of executive compensation incentives on R&D investment: The moderating effect of executive overconfidence. Technology Analysis & Strategic Management 32 (10):1169–81.
  • Luo, H., and W. H. Huang. 2008. State-owned share out bonus, on-the-job consumption and firm performance. Journal of Management World 9:139–48.
  • Luo, W., Y. Zhang, and N. Zhu. 2011. Bank ownership and executive perquisites: New evidence from an emerging market. Journal of Corporate Finance 17 (2):352–70. doi:10.1016/j.jcorpfin.2010.09.010.
  • Lv, W., and S. K. Zhang. 2015. Impact of executive compensation gap on R&D intensity of enterprises——based on the perspective of tournament theory. Soft Science 30 (1):1–5.
  • Manso, G. 2011. Motivating innovation. The Journal of Finance 66 (5):1823–60.
  • Morse, A., V. Nanda, and A. Seru. 2011. Are incentive contracts rigged by powerful CEOs? The Journal of Finance 66 (5):1779–821. doi:10.1111/j.1540-6261.2011.01687.x.
  • Otten, J., H. Schenk, and A. Verwer. 2008. De code Tabaksblat en de beloning van CEOs in Nederland. Maandblad voor Accountancy en Bedrijfseconomie 82 (10):445–53.
  • Porter, L. W., and E. E. Lawler. 1968. Managerial Attitudes and Performance, 209. Homewood, Illinois: Irwin-Dorsey Press.
  • Quan, X., S. Wu, and F. Wen. 2010. Management power, private income and salary manipulation. Economic Research Journal 56 (11):73–87.
  • Rabe, W. F. 1962. Managerial power. California Management Review 4 (3):31–39. doi:10.2307/41165489.
  • Rajan, R. G., and J. Wulf. 2006. Are perks purely managerial excess? Journal of Financial Economics 79 (1):1–33. doi:10.1016/j.jfineco.2005.01.003.
  • Shao, J., Y. Duan, and J. Zhang. 2014. Top management team pay gap’s mechanism and its incentive effect from the perspective of managerial power. Soft Science 29 (9):87–90.
  • Siegel, P. A., and D. C. Hambrick. 2005. Pay disparities within top management groups: Evidence of harmful effects on performance of high-technology firms. Organization Science 16 (3):259–74. doi:10.1287/orsc.1050.0128.
  • Soojin, Y. 2013. The acquisitiveness of youth: CEO age and acquisition behavior. Journal of Financial Economics 108 (1):250–73.
  • Speckbacher, G., and M. Wabnegg. 2020. Incentivizing innovation: The role of knowledge exchange and distal search behavior. Accounting, Organizations and Society 86 (10):101142. doi:10.1016/j.aos.2020.101142.
  • Su, R., and M. H. Gao. 2015. Perquisites and corporate performance: Agent view or efficiency view? Research based on the perspective of executive incentive. Journal of Shenzhen University (Humanities & Social Sciences) 32 (2):102–09.
  • Sun, S., M. Liu, and Y. X. Cheng. 2016. The formation mechanism of perks’ economic effect and the influence of corporate governance on it. China Industrial Economics 1:37–51.
  • Tang, Q. Q., X. Xu, and Y. Cao. 2009. Stock right incentive research investment and sustainable development of enterprises: Evidence from Chinese listed companies. Journal of Shanxi University of Finance and Economics 31 (8):77–84.
  • Till, V., and E. Maika, C. Tessa, & B. Malte. 2015. How CEO experience, personality, and network affect firms’ dynamic capabilities. European Management Journal 33 (4):245–56.
  • Wang, Q. G., and Y. J. Hu. 2011. Research on managerial power and a typical executive compensation behavior. China Soft Science 10:167–75.
  • Wang, Z., G. Q. Fu, and D. Y. Huang. 2014. State-owned enterprises CEO “political promotion” and “on-the-job consumption” relationship. Journal of Management World 5:157–71.
  • Weisbach, M. S. 2007. Optimal executive compensation versus managerial power: A review of Lucian Bebchuk and Jesse Fried’s pay without performance: The unfulfilled promise of executive compensation. Journal of Economic Literature 45 (2):419–28. https://www.jstor.org/stable/27646800.
  • Xie, W. M., and H. X. Fang. 2011. Financial development, financing constrains and firms’ R&D investment. Journal of Financial Research 5:171–83.
  • Xu, N., and X. Y. Xu. 2012. Control rights incentive duality and technology-innovation dynamic capability–empirical analysis based on high-tech listed companies’ panel data. China Industrial Economics 10:109–21.
  • Xu, Q. 2014. Stock options and corporate investment behavior under uncertainty. Accounting Research 3:41–48.
  • Yu, S. M., J. X. Tang, and H. D. Sun. 2019. Performance goal slack, executive incentive and enterprise risk taking level. Frontiers of Science and Technology of Engineering Management 38 (6):24–31.
  • Zhang, X., and J. Wei. 2011. Empirical research on relationship between executive payment structure and technology innovation input: Case of listed companies on SME Board. Journal of Technology Economics 30 (6):11–14.
  • Zhou, F., Y. Fan, Y. An, and L. Zhong. 2017. Independent directors, non-controlling directors, and executive pay-for-performance sensitivity: Evidence from Chinese non-state-owned enterprises. Pacific-Basin Finance Journal 43:55–71.
  • Zhou, F., L. Wang, Z. Zhang, and Y. An. 2018. The impacts of accrual-based and real earnings management on executive compensation: Evidence from Chinese public firms in the private sector. Asia-Pacific Journal of Accounting & Economics 25 (1–2):128–44. doi:10.1080/16081625.2016.1222296.
  • Zhou, Q., and W. Zhu. 2010. On the incentive effects of SOE tournament. China Economic Quarterly 9 (2):571–96.

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.