Managerial Power,Enterprise Risk-taking And Executive Compensation Stickiness

Recently,the executive compensation of listed companies has become the hot issue concerned by scholars at home and abroad.Especially the frequently happened event of“exorbitant price” of executive compensation has already aroused public suspicion on the rationality of compensation.Research suggests that it presents “stickiness” feature between executive compensation and corporate performance,namely,the reductions in executive pay when performance declines are significantly less than the increases in executive pay when performance rises.Compensation stickiness implies the existence of "awards not punish bad" phenomenon in China's executive compensation mechanism,it also shows that the listed companies' executive compensation contracts not only cannot become a tool for enterprises to reduce the agency costs,but itself became a part of the agency problems.The principal-agent theory and optimal contract theory cannot completely explained executive compensation stickiness,based on which,this paper introduces managerial power theory and enterprise risk-taking related theory to investigate the causes of executive compensation stickiness,and to make further research on the influence of managerial power and enterprise risk-taking on executive compensation stickiness,looking forward to provides more targeted recommendations for governing executive compensation stickiness scientifically and reasonably and improving executives compensation mechanism.Taking data of A-share listed companies of China during 2009-2014 as the research sample,this paper used the method of theoretical analysis and empirical research.Firstly,on the basis of defining the relevant concepts,this paper reviews and summarizes the related research status of management power,enterprise risk management and executive compensation,and unifies the related theory to analyze how the managerial power and enterprise risk-taking influence the executive compensation stickiness and the intrinsic link between them,and put forward the corresponding hypothesis in the empirical part,through descriptive statistics,correlation analysis and the full sample and sub sample regression analysis to testify the hypotheses.The results show that:(1)Chinese listed company generally exists significant executive compensation stickiness,in state-owned listed companies,local state-owned companies' executive compensation stickiness is more significant than central enterprises;(2)In corporations with CEO duality and ahigher degree of equity dispersion,the management holds greater power,and the executive compensation stickiness is also more significant,which shows that managerial power significantly increased executive compensation stickiness;further study shows that compared to the central enterprises and non state-owned enterprises,the positive correlation between managerial power and executive compensation stickiness is more significant in the local state-owned enterprises;(3)Enterprise risk-taking has significantly reduced executive compensation stickiness of Chinese listed companies,especially executive compensation stickiness of local state-owned enterprises and non-state-owned enterprises,which suggests that enterprise risk-taking has obvious inhibiting action to executive compensation stickiness of local state-owned enterprises and non state-owned enterprises;(4)After grouped testing by enterprise risk-taking,we found that enterprise risk-taking has negatively adjusted the positive relation between managerial power and executive compensation stickiness.Finally,based on the above conclusions,this paper proposed some political suggestions to solve executive compensation stickiness and improve executives' compensation mechanism of Chinese listed companies,in order to provide decision reference for solving the problem of compensation mechanism in China.