ArticleFrontiers in psychology2021
Investigating the Relationship Between Entity Financialization, Managers' Incentives, and Enterprise's Innovation: Fresh Evidence From China.
Article in Frontiers in psychology, 2021. The graph could read no effect estimate from its abstract, so it casts no vote on the map. Cited by 7 papers.
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Who cites it
7 citing papers in PubMed.
- CEO greed and corporate technological innovation: Analyst coverage as an external governance mechanism in China's A-share market.PloS one · 2025Article
- Article
- The impact of executive compensation incentive on corporate innovation capability: Evidence from agro-based companies in China.PloS one · 2023Article
- Corporate financialization, financing constraints, and innovation efficiency-Empirical evidence based on listed Chinese pharmaceutical companies.Frontiers in public health · 2023Article
- Equity incentive contract characteristics and company operational performance-An empirical study of Chinese listed companies.PloS one · 2023Article
- A double-edged sword: The effects of R&D intensity and capitalization on institutional investment in entrepreneurial firms.Frontiers in psychology · 2022Article
- Impact of multiple performance feedback and regional institutional development on enterprises' exploratory innovation.Frontiers in psychology · 2022Article
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4 authors.
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Abstract
The current study examines the relationship between financialization, managers' incentives, and the enterprise's innovation. Based on the principal-agent and incentive theories, this study proposes a research model with two management incentives as moderating variables between financialization and the enterprise's innovation. First, we analyze the direct relationship between financialization and the enterprise's innovation. Second, we examine the moderating effect of managers' equity incentive and compensation incentives on the relationship between entity financialization and the enterprise's innovation in high-tech/non-high-tech enterprises and state-owned and non-state-owned enterprises. This study covers the most recent updated data from both A-share listed companies in the Shenzhen and Shanghai stock exchange in China from 2009 to 2019. This study's finding indicates a significant negative impact of entity financialization and the enterprise's innovation. It means that the entity financial has a significant "crowding-out" effect on the enterprise's innovation. This study also confirms that management incentives cannot effectively suppress a "crowding-out" impact of entity financialization on firm innovation because of the principal-agent severe problem in financialization. Finally, considering the heterogeneities of property rights and degrees of dependence on the enterprise's innovation, a "crowding-out" effect of entity financialization on the enterprise's innovation is more significant in high-tech and state-owned enterprises. Managers' equity incentive significantly affects the enterprise's innovation in high-tech enterprises, while the managers' compensation incentive affects the enterprise's innovation in state-owned enterprises. Our study could help the enterprise to improve the company manager's incentive and provide the optimal assets allocation to improve the enterprise's innovation ability. Lastly, this study provides significant policies and recommendations for the public sector high-tech enterprise and private sector high-tech enterprises. Moreover, policies and recommendations are fruitful for the public sector non-high-tech enterprise and private sector non-high-tech enterprise.
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