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Operating Leverage, Equity Incentive, and Enterprise Research and Development Investment

Sustainability, 2023-04, Vol.15 (9), p.7023 [Peer Reviewed Journal]

COPYRIGHT 2023 MDPI AG ;2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 2071-1050 ;EISSN: 2071-1050 ;DOI: 10.3390/su15097023

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  • Title:
    Operating Leverage, Equity Incentive, and Enterprise Research and Development Investment
  • Author: Tan, Hui ; Zhang, Xinhua ; Zeng, Lili
  • Subjects: China ; Corporate profits ; Costs ; Equity ; Financial leverage ; Forecasts and trends ; Government business enterprises ; Heterogeneity ; Hypotheses ; Incentives ; Industrial research ; Innovations ; Investments ; Leverage (Finance) ; Officials and employees ; Operating leverage ; Profitability ; R&D ; Research & development ; Sustainability ; Sustainable development
  • Is Part Of: Sustainability, 2023-04, Vol.15 (9), p.7023
  • Description: Science and technology innovation plays a vital role in the sustainable development of enterprises, and even in the security and sustainable development of a nation. Against the background of China’s structural “deleveraging” macro policy, the following two aspects are considered in this research: First, should operating leverage be removed, and how does it affect the innovation investment of enterprises? Second, what will be the impact of the implementation of equity incentives on the relationship between operating leverage and innovation investment? Using a longitudinal panel dataset of Chinese A-share listed companies from 2010 to 2020, this study empirically tested the impact and mechanism of operating leverage on enterprise innovation investment. The findings show that operating leverage significantly contributes to an increase in enterprise innovation investment in general, but the positive correlation trend decreases with the increase in operating leverage. The implementation of equity incentives plays a positive role in moderating the relationship between operating leverage and innovation investment. Further heterogeneity analysis shows that the promotion effect of operating leverage on innovation investment is significant only in non-state owned enterprises (SOE), and the positive regulating effect of equity incentives in non-SOEs is more significant than that of the overall sample.
  • Publisher: Basel: MDPI AG
  • Language: English
  • Identifier: ISSN: 2071-1050
    EISSN: 2071-1050
    DOI: 10.3390/su15097023
  • Source: Geneva Foundation Free Medical Journals at publisher websites
    AUTh Library subscriptions: ProQuest Central
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