Research On The Impact Of Executive Compensation Stickiness On Corporate Merger And Acquisition Performanc

As a strategic way to rapidly expand scale and optimize resource allocation,mergers and acquisitions provide strong support for the development of enterprises.In recent years,in order to promote high-quality M&A and restructuring of enterprises,the state has successively issued relevant guidance,but M&A activities are not always smooth sailing,and different degrees of inefficient M&A events have occurred frequently,affecting the M&A performance of enterprises.As key participants in business decisions,executives have a direct impact on M&A activities.From the previous scholars’ research on executive compensation incentives,it is found that with the improvement of the actual operation of enterprises,the compensation level of executives increases correspondingly,while when the operation of enterprises is not good,the level of executive compensation does not decrease accordingly,showing the sticky characteristics of executive compensation.This means that in the M&A activities of enterprises,there may be an attitude of "heavy rewards and light punishments" and "tolerance of failure" towards the M&A decision-making behavior of executives,and executives may have opportunistic behaviors and carry out merger and acquisition activities that damage the enterprise value in order to satisfy personal interests,thus reducing the M&A performance of enterprises.Taking the data of China’s A-share listed companies from 2010 to 2020 as a research sample,this paper analyzes the impact of executive compensation stickiness on M&A performance and the impact of institutional investors and free cash flow on the relationship between institutional investors and free cash flow based on principal-agent theory,optimal contract theory,and management power.The empirical analysis results show that:(1)There is a significant negative correlation between executive compensation stickiness and M&A performance;(2)Institutional investors negatively regulates the negative correlation between executive compensation stickiness and M&A performance;(3)Free cash flow positively regulates the negative correlation between executive compensation stickiness and M&A performance;(4)It is further found that compared with state-owned enterprises,the negative correlation between executive compensation stickiness and M&A performance in non-state-owned enterprises is more significant.Based on the above conclusions,this paper puts forward policy suggestions for the problems in the design of executive compensation system in listed companies in China and the imperfection of the M&A performance appraisal mechanism.It provides useful references for companies to formulate reasonable M&A incentive mechanisms,design scientific executive compensation systems,and improve corporate governance structures.