Convex Contract Design and the Effectiveness of CEO Compensation Contracts:Evidence from Compensation Stickiness
CEO compensation stickiness is an important indicator to measure the effectiveness of compensation contracts.This paper takes Shanghai and Shenzhen A-share listed companies from 2012 to 2022 as the research object to study the effectiveness of CEO compensation contracts from the perspective of convex contract design.The findings are as follows:(1)There is a marginal increasing convex relationship between CEO compensation and company performance,and CEO compensation performance sensitivity is stronger when performance is higher.There are convex incentive components in CEOs'compensation contracts of Chinese listed companies.(2)The preference for convex compensation contracts is significantly positively correlated with CEO compensation stickiness.Specifically,when facing with financial difficulties,high CEO discretion and strong competition restrictions,companies prefer to adopt convex compensation contracts,and CEO compensation stickiness is more significant.When there are large customers,institutional investors have high shareholding and product market competition is high,companies do not prefer convex compensation contracts,and CEO compensation stickiness is not obvious.This indicates that compensation stickiness is a convex compensation contract designed by shareholders to encourage CEOs to improve their risk taking level.CEO compensation contracts are effective to a certain extent from the perspective of convex contract design,and this conclusion is still valid under a series of robustness tests.
convex contract designeffectiveness of compensation contractscompensation stickinessrisk incentives
万方数据
维普
