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

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Listed:
  • Lei Wang
  • Zhiying Liu
  • Yixian Wang
  • Wei Ai
  • Yunbi An

Abstract

Using data on Chinese A-share listed companies, this paper explores the interactive effects of managerial power and executive compensation incentives on corporate R&D investments. We find that higher executive monetary compensation and perquisite consumption help increase corporate R&D investments, while a large compensation gap within the management team can inhibit corporate R&D investments. We further show that managerial power has different moderating effects on the relation between management incentives and corporate R&D investments. Managerial power weakens the positive effects of explicit and implicit incentives of executives on corporate R&D investments, while it strengthens the negative effect of the compensation gap within the management team on corporate R&D investments.

Suggested Citation

  • Lei Wang & Zhiying Liu & Yixian Wang & Wei Ai & Yunbi An, 2023. "Executive Compensation Incentives and Corporate R&D Investments: An Analysis Based on the Moderating Effect of Managerial Power," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(8), pages 2664-2693, June.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:8:p:2664-2693
    DOI: 10.1080/1540496X.2023.2190841
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