Exploring the mesomeric effect of executive equity incentives on enterprise innovation: a study in the context of digital transformation

Abstract

PurposeThe purpose of this study is to explain the following questions: First, whether the executive equity incentive has an impact on enterprise innovation and digital transformation; Second, if there is any influence, whether there is difference between state-owned enterprises and private enterprises in the research conclusions; Third, whether the digital transformation of enterprises has had an intermediary effect between executive equity incentive and enterprise innovation; Fourth, whether the proportion of independent directors in the corporate governance mechanism has a regulatory effect.Design/methodology/approachIn the context of China's promotion of “digital China” construction and high-quality development of economic innovation, this paper takes Shanghai and Shenzhen A-share listed companies in 2011–2019 as a sample, empirically studies the linear and nonlinear relationship between executive equity incentive and enterprise digital transformation and innovation, and further considers the regulatory effect of heterogeneous property rights and the proportion of independent directors, with a view to improving the reform of China's enterprise equity incentive system make contributions to enterprise innovation and digital transformation.FindingsThe results show that executive equity incentive has a positive role in promoting enterprise digital transformation and innovation, and enterprise digital transformation has a positive role in promoting enterprise innovation; Digital transformation of enterprises has a partial intermediary effect between executive equity incentive and enterprise innovation.Originality/valueFirst, it expands the research on the economic consequences of enterprise salary incentive system. Second, it expands the research on the specific role path of enterprise digital economy transformation. Third, provide new ideas for the reform of corporate governance mechanism.

Too much of a good thing: the dual effect of executive equity incentives on corporate social responsibility performance

“…First, executive equity incentives can reduce agency costs between the principal and the agent. Research has noted that equity incentives enable executives to converge with corporate interests in digital transformation (Zhou et al, 2023;Li et al, 2023). Executive equity incentives positively impact firm innovation (Li et al, 2023) and promote green innovation (Wu et al, 2022).…”

“…Research has noted that equity incentives enable executives to converge with corporate interests in digital transformation (Zhou et al, 2023;Li et al, 2023). Executive equity incentives positively impact firm innovation (Li et al, 2023) and promote green innovation (Wu et al, 2022). Integrating CSR criteria into executive compensation is associated with greater innovation output in countries worldwide (Tsang et al, 2021).…”

“…both the upward and downward sides of the inverted U-shaped will flatten). (Luo et al, 2017;Li et al, 2015;Wang and Qian, 2011;Li et al, 2023).…”

“…Second, we add to the CSR research literature (Luo et al, 2017;Li et al, 2015;Wang and Qian, 2011;Li et al, 2023) by explicitly analyzing the dual effect of executive equity incentives on CSR performance. Existing research on executive equity ownership and CSR performance is mixed (Faller and Zu Knyphausen-Aufseß, 2018) and often does not consider the two competitive effects of equity incentives.…”

“…Research has noted that equity incentives enable executives to converge with corporate interests in digital transformation (Zhou et al. , 2023; Li et al. , 2023).…”