Enterprise Transformation and Innovation: A Study of Performance Compensation from the Perspective of Information Asymmetry

Abstract

Information asymmetry is a key factor affecting M&A performance. In order to preserve value, performance promises are increasingly used in mergers and acquisitions; however, in practical applications performance often falls short of standards. This paper aims to explore how technology-based companies choose performance-based compensation methods from the perspective of information asymmetry by performing regression analysis on the unbalanced panel data. The results show that both equity compensation and annual compensation are more conducive to fulfilling corporate commitments, and two-way compensation enhances the incentive effect of commitments. In addition, technology companies should choose the method of equity compensation and annual compensation to alleviate the degree of information asymmetry by ensuring the degree of completion. Compensation methods can affect the fulfillment of commitments by improving corporate performance, and the degree of impact is different under different corporate governance qualities and debt repayment pressures. Revealing the performance compensation mechanism for fulfilling performance commitments not only expands the research perspective of performance commitments, but also provides a decision-making basis for enterprises to sign commitment agreements.