Based on the institutional background of mandatory requirement of performance-based executive equity incentives, this paper aims to investigate the impacts of executive equity incentives, vesting periods and vesting performance conditions on corporate innovation.,The empirical analysis is based on the detailed data of equity incentives in China’s listed companies from 2006 to 2014, the Tobit method is implemented to estimate the regression coefficients, and the instrumental variable (IV) approach, Heckman two stage regression, propensity score matching and difference-in-difference models are adopted to solve the problem of endogeneity in several robust tests.,This paper documents that equity incentives and vesting periods are significantly and positively related to corporate innovation measured by R&D investment and patent applications, yet requirements on vesting performance impede corporate innovative activities. Specifically, compared with non-equity incentive companies, the R&D investment and the number of patent applications of equity incentive companies are 40 and 46.2 per cent higher, respectively. A one year increase in equity incentive duration can correspondingly increase the R&D investment by 15 per cent and the patent applications by 18.3 per cent. However, a one standard deviation increase in industry-adjusted ROE target reduces corporate R&D investment by 5 per cent and the patent applications by 8.39 per cent. The main empirical findings still hold after several robust tests.,This paper confirms that the impact of performance-based compensation system on corporate innovation depends on its structure. Specifically, the empirical findings suggest that equity incentive plans being correctly designed can enhance corporate innovative activities, but myopic managers will damage the corporate innovation.,This paper investigates the influence of equity incentive structure on equity incentive effect based on the institutional background of mandatory requirement of performance-based executive equity incentives. It provides an opportunity to understand the mystery of equity incentives, which helps to enrich the structure of equity incentive theoretically. The empirical evidence confirms the importance of tolerating short-term failure and extending the horizon of managerial decision-making on promoting innovation. Overall, the research indicates that only well-designed equity incentive plans can promote innovation, which contributes to regulators and practitioners to form a rational understanding of the premise of equity incentives in promoting innovation and provides a reference for their decision-making.

中文翻译：

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基于绩效的股权激励，归属限制和企业创新

然而，对授予业绩的要求阻碍了公司的创新活动。具体而言，与非股权激励公司相比，股权激励公司的研发投资和专利申请数量分别增加了40％和46.2％。延长股权激励期限一年可以相应地将R＆D投资增加15％，并将专利申请增加18.3％。但是，行业调整后的净资产收益率指标每提高一个标准差，企业研发投入将减少5％，专利申请量将减少8.39％。经过几次稳健的检验，主要的实证研究结果仍然成立。本文证实，基于绩效的薪酬体系对企业创新的影响取决于其结构。具体来说，实证结果表明，正确设计股权激励计划可以增强企业创新活动，但近视经理会损害企业创新。，本文基于强制执行绩效的制度背景，研究了股权激励结构对股权激励效果的影响。的高管股权激励。它提供了一个机会来理解股权激励的奥秘，这有助于从理论上丰富股权激励的结构。经验证据证实了容忍短期失败和扩大管理决策的范围以促进创新的重要性。总体而言，研究表明，只有精心设计的股权激励计划才能促进创新，