Equity Incentives and Firm Innovation Efficiency: Moderating Role of Ownership Concentration

Abstract

In order to cope with the new situation and new challenges facing China's economic development, the country proposes to accelerate industrial transformation and upgrading with innovation drive, and lead scientific and technological development with scientific and technological innovation. Manufacturing industry occupies an important share in the national economy, and how to improve the overall competitiveness of China's manufacturing industry and the innovation efficiency of enterprises has become a hot issue of general concern for all sectors of society. Based on innovation theory, principal-agent theory and two-factor incentive theory, this paper systematically investigates executive equity incentives, ownership concentration and innovation efficiency for China's manufacturing industry, and also tests the ownership concentration regulation effect in groups under the perspective of equity optimization. It is found that: (1) Executive equity incentives are significantly and positively related to innovation efficiency. (2) Ownership concentration is significantly and positively related to innovation efficiency. (3) The more significant the promotion effect of executive shareholding on innovation efficiency when the equity is relatively concentrated. This paper can provide a reference for Chinese manufacturing industry to establish a sound incentive mechanism and optimize equity policy.