Abstract
This research selects China A-share listed companies from 2007-2018 as the research sample, and empirically tests the impact of financial excesses and property rights on the executive compensation stickiness. This study finds that financial excesses have a significant regulating effect on executive compensation stickiness, and the degree of stickiness regulation for enterprises with different property rights is quite different. Financial excesses inhibit executive compensation stickiness in local-state-owned enterprises and non-state-owned enterprises, but have a positive effect when it happens in central-state-owned enterprises
Highlights
Jackson et al(2008) defined “executive compensation stickiness” as the phenomenon that the marginal reduction in the compensation of enterprise's senior managers when the performance decline is less than the marginal increase in the compensation of enterprise's senior managers[1]
Are there significant differences between enterprises with different property rights? We empirically test whether different performance indicators affect the degree of executive compensation stickiness, verify whether financial excesses have an inhibiting effect on executive compensation stickiness
The above discussions lead to the following hypothesis in alternative form: H2: Financial excesses have an inhibiting effect on executive compensation stickiness
Summary
Jackson et al(2008) defined “executive compensation stickiness” as the phenomenon that the marginal reduction in the compensation of enterprise's senior managers when the performance decline is less than the marginal increase in the compensation of enterprise's senior managers[1]. Japanese academic scholars have named this phenomenon as “no actual borrowing”. On this basis, Gan Shengdao sums up a new financial concept--financial excesses[2]. Gan Shengdao sums up a new financial concept--financial excesses[2] In this case, financial leverage is low, and mainly use of equity capital will intensify the supervision of the shareholders. We empirically test whether different performance indicators affect the degree of executive compensation stickiness, verify whether financial excesses have an inhibiting effect on executive compensation stickiness.
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