Executive Equity Incentive, Internal Control and Organizational Resilience

Hongwei Zhao (), Ruobin Li () and Chunyu Jiao
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Hongwei Zhao: School of Accounting, Tianjin University of Commerce, Tianjin 300134, China
Ruobin Li: School of Accounting, Capital University of Economics and Business, Beijing 100070, China
Chunyu Jiao: School of Accounting, Henan University of Economic and Law, Zhengzhou 450046, China

IJFS, 2025, vol. 13, issue 4, 1-23

Abstract: Moderate incentive intensity enhances an organization’s resilience, while excessive incentives increase agency issues, reducing organizational resilience. This study empirically investigates the influence of executive equity incentives on corporate organizational resilience, utilizing panel data from Chinese A-share listed companies on the Shanghai and Shenzhen stock markets from 2009 to 2023. Research demonstrates a notable inverted U-shaped correlation between the extent of executive equity incentives and corporate organizational resilience. Further analysis reveals that high-quality internal controls can mitigate the curvature of this inverted U-shaped relationship and shift the turning point forward. Mechanism tests show that executive equity incentives primarily affect organizational resilience by influencing agency costs and short-term management behavior. Heterogeneity analysis reveals that these effects are more significant in private firms and those enterprises with high financing constraints, high information asymmetry and strong economic policy uncertainty. This work extends theoretical research on executive share-based incentives in corporate governance, offering essential empirical evidence and policy implications for companies aiming to improve organizational resilience through the strategic design of incentive structures.

Keywords: executive equity incentives; organizational resilience; internal controls (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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