The Impact Of Performance Compensation Commitments On Corporate Violations

In recent years,with the continuous integration of resources,the development of the capital market has become increasingly mature,and enterprises are constantly looking for new opportunities for development and growth.M&A has the advantages of rapidly expanding the scale of enterprises in a short time,helping companies transform and upgrade,and extending the industrial chain,and has become one of the most popular ways.In order to safeguard the interests of both parties,reduce information asymmetry and promote the smooth completion of mergers and acquisitions,performance compensation commitment agreement has become a widely accepted method.However,in practice,the performance of performance compensation commitment is not satisfactory.From the previous literature research,it is found that the signal effect of performance compensation commitment can play a role in reducing information asymmetry,and the incentive effect can play a role in motivating the management of the target company,and can push up the stock price in the short term.In addition,it can also better play the synergy effect of mergers and acquisitions.However,some studies have found that the acquisition companies will use the "high commitment" performance compensation commitment agreement to achieve the purpose of conveying benefits,and in some mergers and acquisitions that have signed performance compensation commitments,it is more difficult to achieve the goals because of the high commitment.Therefore,when the commitment content cannot be completed,the enterprise will adjust the profits through earnings management and other means to make the commitment "complete" smoothly.Secondly,excessive use or improper use of the performance compensation commitment agreement will also aggravate the risk of the collapse of the enterprise’s share price,and produce a large amount of goodwill impairment and other adverse effects.So,will the performance compensation commitment become one of the factors that affect the violation of the enterprise? Does the different characteristics of performance compensation commitment have different impacts on corporate violations?Therefore,the main purpose of this paper is to find out the impact of performance compensation commitment on corporate violations.This paper mainly studies the impact of performance compensation commitment on corporate violations through the two variables of whether or not to violate the rules and the degree of violation.Therefore,China’s A-share listed companies from 2008 to 2020 are selected as samples,and the conclusions are drawn through multiple regression analysis using probit,logit and ols models.At the same time,the robustness test is carried out by changing the sample interval,changing the measurement method of the explained variables,and changing the regression model,and the reverse causal relationship is also tested.The two-stage least square method is used to carry out the endogenous test.In addition,through further analysis and research on the impact of performance commitment characteristics such as compensation mode,compensation direction,and performance compliance on corporate violations,we can further analyze the channels through which performance compensation commitment affects corporate violations.The empirical results show that the existence of performance compensation commitment agreement will lead to and aggravate the occurrence of corporate violations.At the same time,through further analysis,it is also found that the heterogeneity of enterprises,especially the transparency of information,can reduce the impact of performance compensation commitment agreements on enterprise violations,while the research on the impact of customs clearance on performance compensation commitments and enterprise violations has no effect.In addition,the two-way compensation agreement and the cash compensation agreement can further aggravate the violations of enterprises,and increase the degree of violations.Among them,the impact of cash compensation on whether enterprises violate the rules and the degree of violations is greater than the two-way compensation agreement.According to the empirical results,when both sides of the merger and acquisition enterprises adopt the performance compensation commitment,they should adopt more reasonable compensation methods,formulate more standardized agreement content,and reduce the possibility of enterprise violations.The main contribution of this paper is to expand the research perspective of performance compensation commitment,and also enrich the research on the factors affecting corporate violations from the perspective of performance compensation commitment.At the same time,it provides new ideas for further research on performance compensation commitment and corporate violations.