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How do anticorruption measures affect executive incentive?

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  • Tian, Ni
  • Zhang, Zongyi

Abstract

This paper investigates how anticorruption measures affect corporate governance, especially the executive incentive mechanism. The results of empirical tests show that in the short term, alleviating corruption does not enhance executives incentive, however, it significantly escalates pay-performance sensitivity. It is also found reductions in executive incentive in state-owned companies are more salient than in non-state-owned companies. The suggestion is that anticorruption measures at firm level should be a long-term strategy and focus on state-owned companies. It provides a new perspective for understanding how anticorruption affects firm behavior and performance and for the literature on executive incentives with political intervention.

Suggested Citation

  • Tian, Ni & Zhang, Zongyi, 2018. "How do anticorruption measures affect executive incentive?," Finance Research Letters, Elsevier, vol. 24(C), pages 179-185.
  • Handle: RePEc:eee:finlet:v:24:y:2018:i:c:p:179-185
    DOI: 10.1016/j.frl.2017.09.004
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Anticorruption; Executive incentives; Quasi experiment; Difference-in-differences Method;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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