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How do anticorruption measures affect executive incentive?

Ni Tian and Zongyi Zhang

Finance Research Letters, 2018, vol. 24, issue C, 179-185

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.

Keywords: Anticorruption; Executive incentives; Quasi experiment; Difference-in-differences Method (search for similar items in EconPapers)
JEL-codes: D73 G34 M12 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:finlet:v:24:y:2018:i:c:p:179-185