The relationship between the executive compensation and r&d expenditure

• Main Author: 陳韋穎
• Other Authors: 梁嘉紋
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/89100171255634142434

碩士 === 國立政治大學 === 會計研究所 === 98 === This paper examines the interaction between corporate executive compensation structure and R&D investment decisions during year 2005 to 2008. Considering the endogenesis between compensation and R&D expenditure, that I use two–stage limited method. The empirical results indicate that the percentage of equity-based compensation and stock bonuses to total executive compensation exhibits positive influences on R&D investments, which support the hypotheses that the executives are rewarded based on changes in the stock price to induce a long-term focus on R&D investments. Besides, in respect of the percentage of stock bonuses, the result demonstrates that managerial ownership helps to align manager’s interest with the interest with of stockholder; therefore, corporations decrease the use of equity-based compensation to curb the myopic investment behavior, which supports the convergence of interest hypothesis. This suggests that corporations should design their executive compensation policy appropriately to motivate managers, and improve the alignments between managements and stockholders. Finally, the empirical results also show that after the mandating expensing of employee bonus expense in 2008, corporations recognize that equity-based compensation reduces earnings and dilutes shares price and earnings per share; thus, corporations use more cash-based compensation than equity-based compensation, such as stock option and stock bonus.