| According to the report of the 19th National Congress of the Communist Party of China;"Opening up brings progress,while closing down will inevitably lead to backwardness.China will not close the door to opening up,but will only open wider and wider."As an important part of opening up,in recent years,China is gradually and gradually promoting the opening of the capital market,leading to the re integration of the originally closed A-share market and the global market.In 2013,the State Council issued the Decision on Several Major Issues Concerning Comprehensively Deepening the Reform,which pointed out that we should improve the financial market system,expand the opening of the financial industry to the outside world,improve the multi-level capital market system,and promote the reform of the stock issuance registration system.In 2020,the People’s Bank of China issued the China Financial Stability Report（2020）,pointing out that the capital market reform should be comprehensively deepened,the new securities law should be implemented,and the capital market system should be further improved.The central government regards the two-way opening of the capital market as the key link for the improvement and development of China’s financial system,and must regard the two-way opening of the capital market as the theme of China’s financial reform and development for a long time.The two-way opening of the capital market has introduced fresh water to the market,enhanced international influence,broadened the financing channels of the real economy,and brought a profound impact on the ecology of China’s capital market.In a word,the opening of capital market is the key to smooth the"external circulation"of China’s real economy,and has become an important part of China’s unswerving reform and opening up.Among them,the implementation of the"Shanghai Hong Kong Stock Connect"trading system is one of the major initiatives to open the capital market,which has far-reaching significance for the reform and development of China’s capital market,and is also a hot topic of academic research.Scholars found that the implementation of the"Shanghai Hong Kong Stock Connect"system is not only conducive to reducing market friction,improving market efficiency and promoting economic growth at the macro level,but also has a profound impact on enterprises at the micro level,that is,it is conducive to reducing the cost of capital,improving corporate governance（Jia Lihuan and Xiao Xiang,2021）,and improving corporate value（Wang Hanchen and Wang Tingting,2021）[1][2].However,as an important part of enterprise micro decision-making,few literatures focus on the relationship between capital market opening and executive compensation performance sensitivity.Scholars generally believe that improving executive compensation performance sensitivity is an important measure to alleviate the principal-agent problem between shareholders and managers,which is conducive to the high-quality sustainable development of listed companies.Unfortunately,many studies have found that the executive compensation of Chinese listed companies is not consistent with the company’s performance,that is,the phenomenon of low compensation performance sensitivity is more serious（Guy and Frederick,2000;Li Qi,2003）,which hinders the high-quality and sustainable development of listed companies[3][4].Therefore,actively establishing a scientific and reasonable executive compensation incentive mechanism has become an important part of promoting the high-quality development of listed companies.Based on this,this paper conducts a quasi-natural experiment based on the"Shanghai Hong Kong Stock Connect"trading system by taking the listed companies from 2012 to2020 as the research sample to explore the impact of capital market opening on executive compensation performance sensitivity.The research finds that:（1）Compared with the sample of listed companies in the control group,capital market opening is conducive to improving the executive compensation performance sensitivity of listed companies that are the subject of the"Shanghai Hong Kong Stock Connect"trading system,This basic conclusion is still valid in the case of various robustness tests.（2）In terms of heterogeneity,compared with private enterprises,the effect of capital market opening on the sensitivity of executive compensation performance is more obvious in state-owned enterprises;Compared with companies with weak profitability,the effect of capital market opening on the sensitivity of executive compensation performance is more obvious in companies with strong profitability;Compared with companies with high governance level,the opening of capital market is more conducive to improving the executive compensation performance sensitivity of listed companies with low governance level;Compared with companies with high stock liquidity,capital market opening is more conducive to improving the executive compensation performance sensitivity of listed companies with low stock liquidity.（3）In terms of mechanism,the opening of capital market is conducive to reducing equity concentration,easing financing constraints,improving the quality of corporate information disclosure,and thus improving the executive compensation performance sensitivity of the target listed companies.These conclusions not only provide positive evidence for China to further deepen the reform of the capital market system and promote the opening of the capital market,but also provide new ideas for China to enhance the sensitivity of executives’compensation performance and help the high-quality development of the economy.This paper may have the following contributions:First,it enriches the research scope of the economic effects of capital market opening.Scholars have studied the economic effects of capital market opening from the macro level and micro level,and the relevant research is relatively adequate.However,there is little research on the impact of capital market opening on executive compensation performance sensitivity.Through the research on the sensitivity of capital market opening to executive compensation performance,this paper supplements and expands the existing research on the economic effects of capital market.Secondly,the relevant research on influencing factors of executive compensation performance sensitivity has been improved.Different from other literatures,this paper studies the impact of capital market opening on executive compensation performance sensitivity by directly measuring executive compensation performance sensitivity.The results show that capital market opening can improve executive compensation performance sensitivity,enhance the effectiveness of executive compensation contracts,and on this basis,carry out inspection and analysis of relevant mechanisms to complement and improve the existing literature.Thirdly,based on the existing research,this paper adds the heterogeneity analysis of the governance level and stock liquidity of listed companies.The research finds that compared with the listed companies with higher governance level and stock liquidity,the capital market opening plays a more significant role in improving the sensitivity of executive compensation performance in the listed companies with lower governance level and lower stock liquidity.This is an in-depth expansion of existing literature. |
