Authoritative professional directors, executive incentives and innovation activity
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C93

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    Abstract:

    Using the data of A-share listed companies in China from 2007 to 2015, we empirically examines the logic chain that how authoritative professional directors influence innovation activity through executive incentive. It turns out that the partial mediation effect of the executive incentive is significant. Authoritative professional directors play the role of consultation and supervision by influencing executive incentives at the same time. The advisory role is embodied in improving the level of equity incentive to encourage the innovation of senior executives, while the enterprise will develop to the substantial innovation. This paper extends the potential role of professional directors, and suggests a new angle to recognize their functionary and governance effectiveness. Also, we provide the overall situation of current executives incentive of listed companies in our country. The conclusion of this paper provides some advices for enterprises to set up reasonable incentive contracts and for supervision department to improve the board governance rules.

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  • Online: October 25,2021
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