Enterprise Digital Transformation And Executive Compensation Incentive: Evidence From Chinese Listed Companies

Since the outbreak of COVID-19,economic growth has been in trouble.It is urgent to find a new economic development mode to inject vitality into the global economy.The digital economy,as an important engine for driving economic growth,plays an important role in the recovery of China and even the global economy.The digital economy is a major trend in current social development and has milestone significance in the way of economic development.At present,most enterprises in our country adopt a corporate governance structure with two separate powers,which has led to the first type of agency problem and the second type of agency problem.Supervision and motivation are often considered effective means to solve agency problems.Executive compensation incentives are recognized by the optimal compensation contract view.The key to exploring the effectiveness of compensation contracts is to examine whether executive compensation is sensitive to corporate performance.This relationship is called executive compensation performance sensitivity.The higher the sensitivity of executive compensation to performance,the greater the correlation between executive compensation and corporate performance,and the more effective the design of compensation contracts.Under the new economic development mode,whether digital technology can enhance the sensitivity of executive compensation performance,alleviate agency problems,and improve corporate governance has become the research focus of many scholars.This article selects Shanghai and Shenzhen A-share listed companies from 2012 to 2021 as the research object.This paper mainly explores the impact of corporate Digital transformation on executive pay performance sensitivity.In the subsequent research section,the nature of property rights and technological attributes will be used as grouping references to distinguish between state-owned enterprises,non-stateowned enterprises,high-tech enterprises,and non high-tech enterprises.Secondly,according to regional attributes,the research samples are divided into the eastern region,central region,western region,southern region,and northern region.Furthermore,taking into account the lifecycle of the enterprise,distinguishing between growth,maturity,and decline periods.Through the above grouping,we will explore the impact of enterprise heterogeneity on the relationship between Digital transformation and pay performance sensitivity.Finally,from the three paths of information transparency,media attention,and information asymmetry,this paper conducts a mechanism test on the relationship between Digital transformation and pay performance sensitivity,and explores the path of Digital transformation’s impact on pay performance sensitivity.In the robustness test,this paper uses substitution variables,deletes special samples,increases the urban fixed effect,explains the lag of variables by one period,controls the influencing factors of salary performance sensitivity,and implements the robustness test with instrumental variable method.The test results are consistent with the conclusions of this paper,proving the reliability of the results of this study.This study finds that: first,the Digital transformation of enterprises is positively related to executive pay performance sensitivity.Second,compared with state-owned enterprises,non-state-owned enterprises’ Digital transformation has a more significant impact on salary performance sensitivity.Compared with non high-tech enterprises,high-tech enterprises’ Digital transformation has a more significant impact on salary performance sensitivity.Third,compared with enterprises in the central and western regions and northern regions,enterprises in the eastern region and southern regions have a more significant impact on salary performance sensitivity through Digital transformation.Fourth,for enterprises in growth and recession,Digital transformation has a more significant impact on salary performance sensitivity.Fifthly,Digital transformation improves the sensitivity of management compensation performance by improving information transparency,attracting media attention,and reducing information asymmetry.