Research On The Influence Of Executive Explicit And Implicit Compensation Incentives On Corporate Charitable Donation

With the rapid development of China’s economy,the gradual improvement of the social system,the increasingly fierce competition in the market,and the people’s increasing standard of living for themselves,all require enterprises,as the pillar of social and economic development,to continuously improve the fulfillment of social responsibility.Therefore,enterprises have the ability and obligation to improve the level of fulfillment of social responsibility.Charitable giving is an important part of corporate social responsibility,and studies have found that charitable giving is an important way to enhance the core competitiveness of enterprises and thus improve their business performance,which not only contributes to the development of the country and society,but also wins competitive advantages for their own long-term development.The reasons for charitable giving vary from one company to another and have a crucial impact on the effectiveness of corporate initiatives to safeguard public interests and improve social welfare.Executive compensation is a hot and difficult issue in corporate governance at home and abroad.Reports of "sky-high compensations" are very common,especially the compensations of executives of state-owned enterprises and the resulting social problems have attracted great attention from the society.In view of the above problems,China promulgated the "Salary Cap" in 2009 and 2015 respectively to curb the soaring monetary salaries of executives of state-owned enterprises in China.On the one hand,the curbing of "high compensations" may lead to the substitution of many hidden salaries represented by perks.On the other hand,in order to strengthen the rationality of "high pay" and gain public recognition,executives may take the initiative to assume corresponding social responsibility.Therefore,there is an inherent correlation between executive compensation and charitable giving,but the existing research on the relationship between the two has some shortcomings.This thesis takes executive compensation incentives as the antecedent of charitable giving,divides them into explicit monetary compensation incentives and implicit perks,and explores the impact of executive compensation incentives on corporate charitable giving and the mechanisms of their effects based on the "implicit-explicit" contractual incentive research paradigm.The study finds that explicit monetary compensation incentives and implicit perks promote corporate philanthropic giving,while the political affiliation of executives plays a positive role in moderating the relationship between executive compensation incentives and corporate philanthropic giving.Finally,this thesis analyzes the impact of the nature of firm ownership on the above empirical results.The results show that the sensitivity of the relationship between explicit monetary compensation incentives of executives and corporate charitable giving is stronger when the firm is state-owned,and the sensitivity of the relationship between implicit perks of executives’ compensation incentives and corporate charitable giving is stronger when the firm is non-state-owned.The findings of this thesis can provide useful reference for the executive compensation incentive mechanism of listed companies,prompting them to adopt a compensation incentive mechanism that suits their own corporate goals,with reference to the design of top management compensation system and restraint of inappropriate perks of executives;at the same time,it also enriches and expands the research field of executive compensation incentive and corporate charitable giving behavior.