 Anti-corruption and CEO compensation: Evidence from a natural experiment in ChinaDongmin Kong, Ling Zhu and Xin Wang Economic Modelling, 2022, vol. 106, issue C Abstract: In emerging markets, the externality of political environment is an important factor affecting the design of agent contracts. However, few studies have studied political determinants of incentives in CEO compensation. This study utilizes an exogenous political shock in China (i.e., the investigations of the Central Commission for Discipline Inspection) to identify the causal effect of anti-corruption on CEO compensation by using firm-level data during 2000–2016 from China through a difference-in-differences method. By considering the reduction in corruption arising from the shock, we find that CEO compensation substantially increases. Channel analysis reveals that the anti-corruption campaign reduces the negative externalities of corruption and increases incentive efficiency in non-state-owned enterprises. In addition, the effect of the anti-corruption campaign on CEO compensation is particularly pronounced with firms exposing to high corrupt environment, inspection groups having high ability, and CEOs without political connections. Keywords: Corruption; CEO compensation; Natural experiment; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:106:y:2022:i:c:s0264999321002868 DOI: 10.1016/j.econmod.2021.105697 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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