An Empirical Study on the Impact of Pay-forPerformance on Corporate Technology Innovation
- XIE Weimin
- Dongbei University of Finance and Economics, 116025.
The optimal contract theory puts forward that pay-for-performance can align the interests of management well with the shareholders', and can encourage the management to make more efficient investment decisions to create value. However, pay-forperformance may also encourage the management's short-term view. China is implementing the innovation-driven development strategy, and vigorously encourages technological innovation of enterprises. Whether pay-for-performance promotes corporate innovation or not is an important academic issue that has yet to be discussed in depth. Based on the statistics about Chinese non-financial A-share listed companies of 2007—2015, this paper investigates the impact of pay-for-performance on corporate innovation. The empirical study results show that pay-for-performance discourages corporate innovation. Further research shows that the inhibition effects of pay-for-performance on corporate innovation are more significant for the invention patent and the utility model patent, and more obvious for the samples of non-state-owned enterprises. The research results enrich research literature on corporate innovation, and provide new knowledge on the effectiveness of the compensation incentive plan of pay-for-performance. Moreover, the research results shed light on on how to improve the compensation incentive scheme, encourage corporate innovation, and promote healthy and sustainable development of the economy.
JEL：D21, M52, G11
- Compensation Contract, Performance Evaluation, Pay for Performance, Corporate Technology Innovation