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Do insiders share pledging affect executive pay-for-performance sensitivity?

Caiyue Ouyang, Jiacai Xiong and Lyu Fan

International Review of Economics & Finance, 2019, vol. 63, issue C, 226-239

Abstract: We examine the impact of insider share pledging (ISP) on executive pay-for-performance sensitivity. Using Chinese data, we find that ISP leads to a decrease in executive pay-for-performance sensitivity. The results on the additional analyses show that when firms facing high ownership change risk (non-state-owned firms, located in high marketization region, or with high stock price crash risk), the adverse impact of ISP on executive pay-for-performance sensitivity magnifies. In contrast, when a firm has good internal and external corporate governance (high institutional ownership, good internal control system, auditor with industry specific knowledge, or more analyst following), the adverse impact of ISP on executive pay-for-performance sensitivity alleviates.

Keywords: Share pledging; Agency problem; Executive compensation (search for similar items in EconPapers)
JEL-codes: G18 G30 G34 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:63:y:2019:i:c:p:226-239

DOI: 10.1016/j.iref.2018.10.019

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