Research On The Impact Of Management Power On Implicit Compensation Defense In The Institutional Environment

The fairness of implicit salary has been widely concerned by the public in recent years.As part of hidden salary,excess on-the-job consumption is a product of management’s self-interest,which will directly affect contract efficiency and weaken the incentive mechanism.With the continuous increase in social attention and regulatory power,the level of excess on-the-job consumption remains high.In addition to its concealment,what masks the unreasonable part of implicit incentives is a topic that needs continuous attention in research.Institutional environment,as an market environment,is the foundation on which a company depends.Regarding implicit salary defense behavior,what kind of external governance role the institutional environment plays is also a realistic issue that the market needs to pay attention to.Based on this,this article takes A-share listed companies from 2013 to 2018 as the research object.After data screening and processing,a total of 9223 valid samples were obtained.First,use the power model to construct the management power’s integral value from four dimensions and seven indicators,and use the calculation model of reasonable on-the-job consumption to calculate the excess on-the-job consumption level;Secondly,based on the multiple regression model to study the relationship between management power and excess on-the-job consumption,the on-the-job consumption-performance sensitivity test is used to test the management’s implicit compensation defense behavior,as well as the role of property rights and the institutional environment to regulate the defense behavior;Finally,in further research,conduct a detailed analysis of the behavior of management’s implicit compensation defense.The empirical research in this paper shows that:(1)There is a significant positive correlation between management power and excess on-the-job consumption.The higher the power,the stronger the management’s motivation to obtain hidden private benefits;(2)In order to reduce the pressure of public opinion and market suspicion,when management obtains a high level of on-the-job consumption,it will use power to justify the implementation of results by increasing on-the-job consumption-performance sensitivity.By distinguishing the nature of property rights,it is found that the implicit compensation defense behavior is more significant in non-state-owned enterprises;(3)Dividing the institutional environment into three proxy variables:marketization process,rule of law environment,and factor market.Adding crossover items,it is found that the development of marketization,a good rule of law environment and a sufficiently liquid factor market can significantly inhibit the defense behavior of management and play a good role in external governance;(4)The increase of management’s hidden salary defense pressure will increase the degree of manipulation of true earnings management,indicating that true earnings management is the main method used by management to defend high-volume on-the-job consumption.The research contribution of this article is to verify management’s defense behavior of hidden compensation,and to find the regulating effect of external institutional environment,supplementing the related research on compensation defense to a certain extent.According to the research conclusions,this article puts forward policy recommendations from three aspects:strengthening the internal governance mechanism,improving the design of compensation contracts and promoting the process of marketization construction,with a view to providing some reference for restricting irrational behavior of management and improving the fairness of hidden compensation.