Abstract：This paper is different from previous research, focusing on the internal innovation motivation of executives. It is pointed out that information transparency provides more information about the work of managers. As a kind of implicit incentive contract, it can reduce the fear of managers on R&D failure, and thus promote innovation investment to a greater extent. This kind of promotion will change under different internal and external situations of the company, and it will have certain enlightenment on how the company can successfully innovate. Based on the theory of information asymmetry and the theory of principal-agent, the article uses the data of A-share non-financial listed companies in the Chinese market from 2009 to 2016 to measure information transparency from the perspective of earnings management, and uses OLS regression and dynamic analysis methods to explore the impact of information transparency on corporate R&D and the path of action. The empirical results show that: (1) Information transparency positively affects R&D investment, and this positive impact is constrained by executive power, that is, when executive power is enhanced, the promotional effect will be weakened; different situation analysis shows that only in the group that is not short-selling, executive power can inhibit the positive relationship between transparency and R&D, while the group that does short selling cannot have an impact. In addition, further research and analysis shows that the improvement of information transparency reduces the sensitivity of managers' compensation and R&D output, which can stimulate managers' innovation motivation and will not cause trade secret leakage.The contributions of this paper mainly include the following three aspects: First, the article goes in a new perspective of “implicit incentive contract”, pointing out that information transparency can provide shareholders with concrete evidence of the hard work of managers, thus prompting enterprises to form an atmosphere which can tolerate failure. The atmosphere finally achieves the purpose of stimulating managers' internal motivation. This helps to enrich and extend the existing literature on the function of accounting information, while supporting the view that tolerance for early failure is the best way to motivate innovation. Therefore, shareholders should pay more attention to the details of the hard work of executives in the R&D process. If they only value the outputs, the enthusiasm of R&D will be strangled.And the company will produce a vicious circle of “low R&D output – lower pay – lower output after pay cuts”. Secondly, the article introduces internal managers' authority as the moderator variable, and external market short selling as the situational variable. By cross-considering the common influence brought by the internal and external factors of the company, it is pointed out that short selling can correct the problem of excessive concentration of power within the enterprise, and it provides micro-level data support for the effectiveness of short-selling policies. Finally, based on the existing law environment in China, it points out that the improvement of information transparency will not only promote R&D investment, but also promote the output, indicating that information transparency will not bring the crisis of trade secret leakage. To a certain extent, it has eliminated the concerns of business owners on whether to improve the transparency of information, and provided a literature basis for the relevant state departments to deepen the reform of accounting disclosure.

Keyword：corporate governance; R&D innovation; transparency; executive power; short selling;