Career stage, manager incentive and R&D innovation in high-tech companies-Evidence from a share stock market

Fu Dong-liang, Zhang Lie and M

Abstract

This paper examines the effect of compensation incentive and equity incentive on R&D investment during manager’s different career stage using high-tech companies which discloses R&D cost from 2009 to 2012. We find that both compensation and equity induce more R&D investment, and the effect of compensation incentive declines as the manager’s career becomes shorter, but the effect of equity incentive not. This paper shows that shareholders need to choose proper incentive according to the manager’s career stage in order to promote more technology innovation