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Tax incentives for key employees and corporate innovation

Author

Listed:
  • Huang, Yongjian
  • Ren, Zhaoyue
  • Zhang, Hongwei
  • Wen, Pengxiang
  • Li, Zhouyang

Abstract

This study finds that tax incentives for key employees promote corporate innovation, especially in firms with lower employee compensation and firms that are less risk-taking. Furthermore, increased corporate human capital could be a channel through which innovation is advanced.

Suggested Citation

  • Huang, Yongjian & Ren, Zhaoyue & Zhang, Hongwei & Wen, Pengxiang & Li, Zhouyang, 2024. "Tax incentives for key employees and corporate innovation," Economics Letters, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:ecolet:v:238:y:2024:i:c:s0165176524001915
    DOI: 10.1016/j.econlet.2024.111708
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    References listed on IDEAS

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    1. Gustavo Manso, 2011. "Motivating Innovation," Journal of Finance, American Finance Association, vol. 66(5), pages 1823-1860, October.
    2. Atanassov, Julian & Liu, Xiaoding, 2020. "Can Corporate Income Tax Cuts Stimulate Innovation?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 55(5), pages 1415-1465, August.
    3. Oyer, Paul & Schaefer, Scott, 2005. "Why do some firms give stock options to all employees?: An empirical examination of alternative theories," Journal of Financial Economics, Elsevier, vol. 76(1), pages 99-133, April.
    4. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.
    5. Magnus Henrekson & Tino Sanandaji, 2018. "Stock option taxation: a missing piece in European innovation policy?," Small Business Economics, Springer, vol. 51(2), pages 411-424, August.
    6. Bird, Andrew, 2018. "Taxation and executive compensation: Evidence from stock options," Journal of Financial Economics, Elsevier, vol. 127(2), pages 285-302.
    7. Xuan Tian & Jiajie Xu, 2022. "Do Place-Based Policies Promote Local Innovation and Entrepreneurship? [A model of growth through creative destruction]," Review of Finance, European Finance Association, vol. 26(3), pages 595-635.
    8. Ajay Bhaskarabhatla & Luis Cabral & Deepak Hegde & Thomas Peeters, 2021. "Are Inventors or Firms the Engines of Innovation?," Management Science, INFORMS, vol. 67(6), pages 3899-3920, June.
    9. Ho, Po-Hsin & Huang, Chia-Wei & Lin, Chih-Yung & Yen, Ju-Fang, 2024. "Risk culture in corporate innovation," International Review of Financial Analysis, Elsevier, vol. 91(C).
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    11. Mei, Lanlan & Hu, Tengyin & Mao, Zhouheng & Wang, Zehao, 2023. "Equity incentive characteristics, industry life cycle and corporate innovation," Finance Research Letters, Elsevier, vol. 58(PC).
    12. Atanassov, Julian & Liu, Xiaoding, 2020. "Can Corporate Income Tax Cuts Stimulate Innovation? - ERRATUM," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 55(5), pages 1755-1755, August.
    13. Sun, Xiuli & Li, Haizheng & Ghosal, Vivek, 2020. "Firm-level human capital and innovation: Evidence from China," China Economic Review, Elsevier, vol. 59(C).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate innovation; Tax incentives; Key employees; Equity incentives; Human capital;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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