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Management equity incentives, market dynamics, and corporate R&D investment

Author

Listed:
  • Hu, Chun
  • He, Haoyang
  • Wang, Fei
  • SHIN, YEON-SOO

Abstract

This paper utilizing data from Chinese listed companies spanning 2009 to 2021, to analyzes the link between management equity incentives, market dynamics, and corporate R&D investment. The study shows that management equity incentives significantly increase both R&D expenditures and the number of R&D personnel within firms. This equity incentive mechanism indirectly promotes R&D activities by alleviating financing constraints, which further enhances market dynamics. Moreover, there are differences in the response to equity incentives based on property rights, highlighting that equity incentive strategies should consider firm type characteristics. These findings provide important empirical support for policymakers and corporate management in designing effective equity incentive policies.

Suggested Citation

  • Hu, Chun & He, Haoyang & Wang, Fei & SHIN, YEON-SOO, 2025. "Management equity incentives, market dynamics, and corporate R&D investment," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002624
    DOI: 10.1016/j.frl.2025.106998
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    More about this item

    Keywords

    Management Equity Incentives; Market Dynamics; R&D Investment; Market Liquidity; Financing Constraints;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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