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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.

Based on the background of the restricted stock has gradually replaced stock option and has become the mainstream equity incentive model in China, this paper aims to investigate the which factors affect the choice of equity incentive model, and the impacts of equity incentive model.

The theoretical analysis is based on the game theory between shareholders and top executives. The empirical analysis is based on the detailed data of equity incentives in China’s listed companies from 2006 to 2017; the logit method and least square method are implemented to estimate the regression coefficients and Black–Scholes options pricing model to estimate the value of restricted stock/option granted to the CEO.

This paper documents that enterprises with serious agency problems, high investment risks, high stock price synchronicity and great executive power are significantly and positively related to restricted stock. The main empirical findings still hold after several robust tests. In addition, restricted stock can significantly improve corporate performance when the performance evaluation index is strict and the validity period is long, while for the sample group with loose performance index and short validity period, restricted stock significantly reduces corporate performance.

This paper analyzes the “black box” of equity incentive model selection from the stakeholders’ game perspective by constructing a game theory model to investigate the reasons for the choice of equity incentive model in various situations, which enriches the research in this field. Moreover, this paper finds that restricted stock has both incentive and welfare characteristics, and the rationality of performance appraisal goals is the key factor leading to the difference in incentive effects. Overall, the research indicates that only well-designed equity incentive plans can improve corporate performance, which contributes to regulators and practitioners to form a rational understanding of restricted stock model and provides a reference for their decision-making.

With the accelerated technological advancement, innovation has become a critical factor, which affects the core competitiveness of a company. However, studies about the relationship between internal stock option mechanisms and innovation productivity remain limited. Therefore, this paper aims to examine the impact of stock options and their elements design on innovation output from an internal mechanism perspective.

Using a sample of 302 stock option incentive plans announced and implemented between 2006 and 2016, this study uses the propensity score matching and difference-in-difference model to find out whether the implementation of stock options improves the innovation outputs of enterprises.

Based on the statistical analysis, it is concluded that: stock options can stimulate corporate innovation; a stock option may drive innovation outputs through two ways, performance-based incentives and risk-taking incentives, with the latter one playing a more dominant role and the risk-taking incentives of stock options, could be optimised when the non-executives granting proportion is larger, the granting range is limited, the incentive period is longer, the exercisable proportion is increasing, the price-to-strike ratio is lower and relatively loose performance assessment criteria are applied.

The conclusion reached in the study may provide valuable information to listed firms in designing and implementing the stock option plans.

In this paper, we review the literature on pay variation (e.g., pay dispersion, pay compression, pay range) in organizations. Pay variation research has increased markedly in the past two decades and much progress has been made in terms of understanding its consequences for individual, team, and organizational outcomes. Our review of this research exposes several levels-related assumptions that have limited theoretical and empirical progress. We isolate the issues that deserve attention, develop an illustrative multilevel model, and offer a number of testable propositions to guide future research on pay structures.

This paper aims to examine whether there is an association between the level of performance‐based incentives offered to CEOs and the composition of firms' boards of directors and the compensation committee.

Univariate tests are used to test the relation between the level of performance‐based incentives and corporate governance structures. A logistic regression analysis is used to predict the probability of CEOs receiving low performance‐based incentives when various characteristics of firms' boards of directors and compensation committees exist.

The authors find the presence of CEO duality reduces the likelihood of lower levels of performance‐based incentives offered to CEOs. Additionally, the authors find CEOs are more likely to receive lower levels of performance‐based incentives when the majority of the compensation committee members serve on less than three other boards, and when the size of the board is less than or equal to nine members.

This study is limited by the fact that the sample may not be representative of the general population of companies in the US.

Shareholders who desire to keep CEO compensation levels low may consider supporting the separation of the positions of CEO and Chairperson of the Board, as well as supporting limiting the number of other boards directors may serve, and reducing or keeping the size of the board to a maximum of nine members.

The authors have documented an association between board structure and CEO compensation. It appears that company boards are able to monitor and control the compensation level offered to CEOs.

Purpose – This research studies how the discipline of option-like personal equity portfolio and the market discipline of debt jointly affect executive compensation design.

Design/methodology/approach – A theoretical model is proposed based on the moral hazard problem of Holmstrom and Milgrom (1987) by integrating firm financial leverage, executive equity holding, and profit-sharing rule. Subsequently, a panel data set of executive compensation is analyzed to provide empirical evidence.

Findings – The discipline of option reduces the need of performance-based compensation. The discipline of debt reduces the use of incentive pay for lowly leveraged firms, but increases the use of incentive pay for highly leveraged firms. These two disciplines can be either complements or substitutes on affecting optimal contracts depending on firm leverage.

Research limitations/implications – The present study provides a starting point for further study of optimal compensation that is not only the conventional one of mainly aligning managerial interests with that of shareholders but also the one of reinforcing the joint discipline of debt and option.

Originality/value – This new perspective produces several results characterizing firms that the discipline of debt and the discipline of option can be either complements or substitutes on affecting incentive compensation design.

Based on the principal–agent and stakeholder theories, this study aims to put forward an intermediary model to verify the intermediary role of corporate social responsibility (CSR) in executive equity incentives and corporate innovation performance to improve corporate innovation performance.

The 2012–2018 A-share listed companies’ disclosure of executive equity incentives data was used as the research sample. This study used CSR as an intermediary to explore the relationship between executive equity incentives and corporate innovation performance. A verification analysis was carried out.

The research results show that: a positive correlation exists between executive equity incentives and corporate innovation performance, and executives’ reasonable equity incentives can promote the growth of corporate innovation performance. A positive correlation exists between executive equity incentives and CSR. Implementing equity incentives for executives can stimulate their motivation to assume CSR. A positive correlation exists between CSR and corporate innovation performance. The more a company fulfills its social responsibility, the more it can promote the improvement of corporate innovation performance. CSR plays a mediating role between executive equity incentives and corporate innovation performance. CSR promotes executive equity incentives’ impact on corporate innovation performance and exerts a “complete mediating effect” between the two.

The number of samples and the time span of samples can be expanded in the future. This research has tested the mediating effect of CSR, but other mediating variables may play a role in the process of executive equity incentives in promoting corporate innovation performance. Further research should be conducted to explore the mediating effect of financing constraints and media attention on corporate innovation performance. This study only verifies the influence of equity incentives on CSR and innovation performance of senior executives. In the future, other incentive methods should be explored, such as salary incentives.

Foreign research on equity incentives has matured, but the experience of foreign countries cannot necessarily produce the expected effect in China. More than ten years have passed since the China A-share market began implementing equity incentives on December 31, 2005. As of December 31, 2017, about one-third of enterprises in the high-tech industry that had introduced equity incentives had stopped implementing the policy. Data from 2012 to 2018 were selected to analyze the relationship between executive equity incentives, CSR and corporate innovation performance to explore the influence mechanism of equity incentives. This study provides a comprehensive theoretical framework to examine the interaction among executive equity incentives, CSR and corporate innovation performance. Because most previous studies have focused on the relationship between executive equity incentives, CSR and corporate innovation performance, they are rarely been used as an intermediary variable to explore the impact of executive equity incentives on corporate innovation performance. This study explores the impact of executive equity incentives on corporate innovation performance under the influence of CSR. Moreover, this study explores the mediating role of CSR in corporate governance, which provides a new perspective for CSR research and verifies relevant literature on the mediating effect model.

Research countermeasures and suggestions: the research results are significant for enterprises implementing executive equity incentives, fulfilling CSR, enhancing corporate reputation, improving corporate innovation performance and ultimately obtaining market competitiveness. Therefore, the following suggestions are proposed: establish and improve the executive equity incentive mechanism and strengthen the promotion effect of executive equity incentives in CSR and corporate innovation performance. Strengthen the awareness of enterprises to actively fulfill CSR and give full play to the role of CSR in promoting corporate innovation performance. Improve the profitability of enterprises and focus on the promotion effect of enterprise profitability on corporate innovation performance.

This study focuses on executive equity incentives and introduces CSR as an intermediary variable to explore the influence path of executive equity incentives on corporate innovation performance. Based on the research results, this study takes targeted measures to improve corporate innovation performance and maintain its healthy growth of corporate innovation performance. This is significant in enhancing enterprises’ core competitiveness and promoting the enterprise economy’s sustainable development. Meanwhile, the enterprise has significant reference value in actively fulfilling its CSR and realizing its stable and healthy development.

This paper analyzes economic, legal, behavioral and public policy issues pertaining to the accounting for employee stock options. The paper explains why employee stock options (ESOs) are superior to other forms of incentive compensation, why ESOs in their present form are inefficient and why particular accounting, legal and tax treatments will provide the optimal results for the economy, the government, management/employees and shareholders. The issues discussed in this article are relevant in ESO accounting, regulation of ESOs, incentive compensation, human resources analysis, tax policy, corporate governance, fraud, valuation of companies, derivatives regulation, behavioral analysis of law/rules, portfolio management and management strategy.

The study aims to explore the theoretical bases justifying the use of performance-based financing (PBF) in the health sector in low- and middle-income countries (LMICs).

The authors conducted a scoping review of the literature on PBF so as to identify the theories utilized to underpin it and analyzed its theoretical justifications.

Sixty-four studies met the inclusion criteria. Economic theories were predominant, with the principal-agent theory being the most commonly-used theory, explicitly referred to by two-thirds of included studies. Psychological theories were also common, with a wide array of motivation theories. Other disciplines in the form of management or organizational science, political and social science and systems approaches also contributed. However, some of the theories referred to contradicted each other. Many of the studies included only casually alluded to one or more theories, and very few used these theories to justify or support PBF. No theory emerged as a dominant, consistent and credible justification of PBF, perhaps except for the principal-agent theory, which was often inappropriately applied in the included studies, and when it included additional assumptions reflecting the contexts of the health sector in LMICs, might actually warn against adopting PBF.

Overall, this review has not been able to identify a comprehensive, credible, consistent, theoretical justification for using PBF rather than alternative approaches to health system reforms and healthcare providers' motivation in LMICs.

The theoretical justifications of PBF in the health sector in LMICs are under-documented. This review is the first of this kind and should encourage further debate and theoretical exploration of the justifications of PBF.

The intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide. As the energy sector is responsible for most global emissions, developing clean energy is crucial to combat climate change. This study aims to examine the relationship between corporate governance and renewable energy (RE) consumption and explore the interaction between RE production and RE use.

The study adopts an econometric framework of a panel model, followed by the robustness check using alternative methods, including logit regressions. The bivariate probit model is used to analyze the interaction between the decision to use and the decision to produce RE. The analysis is based on a sample of 3,896 firms covering 45 countries worldwide.

The results reveal that appropriate governance mechanisms positively impact RE consumption. These include the existence of a sustainability committee; environmental, social and governance-based compensation policy; financial performance-based compensation; sustainability external audit; transparency; board gender diversity; and board independence. Firms with appropriate governance mechanisms are more likely to produce and use RE than others. Finally, while RE use positively impacts firm value and environmental performance, the authors find no significant effect on current profitability.

This study goes beyond previous research by exploring the impact of multiple governance mechanisms. To the best of the authors’ knowledge, this is also the first study examining the relationship between RE use and firm value. Overall, the findings suggest that RE transition requires, first of all, establishing appropriate governance mechanisms within companies.