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Abstract We examine executives career characteristics and institutional investors governance impacts on R&D investments using samples of the non-financial Astock listed companies.We find that executives career characteristics have significant positive influence on R&D investments.The longer term executives engage in and the higher monetary compensation they get,the corporate R&D investments will be larger.However,this incentive effect to increase R&D investments will be weakened in an environment which institutional investors could supervise the executives effectively.For the risk of future career reputation damage and a dismission resulting from R&D investments failure,executives tend to avoid risk and have less willings to increase R&D investments.This article highlights the balance of the short and long term incentives.The board and shareholders should be prudent to penalize executives for the deperformance caused by R&D investments failures,which will dispel top executives' worry and motivate them to increase R&D investments.
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