| Executive compensation management is an important part of corporate governance practice.It aims to alleviate the agency conflict between shareholders and management caused by the separation of company ownership and management rights,promote the improvement of company performance and increase shareholder wealth.For a long time,how to design the optimal executive compensation contract structure has always been a problem that plagues the academic and practical circles.As a governance mechanism to solve the short-termism behavior of management,executive severance agreements have been widely used in foreign corporate governance and compensation management practices.Executive severance agreements refer to the special remuneration system that pre-arranges the remuneration payment conditions,payment methods and payment amount of the company’s senior executives when retiring or resigning,which can reduce the short-term interests of senior executives engaged in short-termism behavior and the tendency to ignore the company’s long-term value.At the same time,China’s listed companies in the "Senior Management Compensation Management Measures" stipulates the executive severance agreements,including the trigger conditions for the remuneration payment and the calculation of compensation.Since the listed companies in China did not adopt a negotiation method to sign the executive severance agreements with the senior management,and the “Management Measures for Senior Management Compensation” was applied to the entire management of the company after the announcement,which not only reduced the cost of contract negotiations but also improved the transparency in the implementation of the terms of the deeds,moreover,the terms of the executive severance agreements implemented by listed companies in China are quite different from those in foreign countries.However,domestic scholars pay less attention to the impact of listed companies on the implementation of executive severance agreements on short-termism behavior of companies.Based on principal-agent theory,information asymmetry theory and insurance theory,this paper takes the 2008-2016 Shanghai-Shenzhen A-share listed company as a research sample,and uses the Probit model and OLS multiple regression model to empirically test the effect of executive severance agreements on the company’s shorttermism behavior.The research results show that executive severance agreements can significantly reduce the short-termism behavior of the company’s managers,and its corporate governance effect is obvious.Executive severance agreements can reduce the short-termism behavior of the company’s managers to reduce R&D expenses to a certain extent,and reduce the manager’s earnings management manipulation behavior.Governance effects are significant for manager’s accrued earnings management manipulations and real earnings management manipulations.The research results provided in this paper preliminarily verify the governance effect of executive severance agreements on the company’s managerial short-termism behavior.Executive severance agreements have certain restraining effect on the short-termism behavior of the listed company’s managers.This paper examines the impact of executive severance agreements on shorttermism behavior of listed companies from the perspective of R&D reduction and earnings management,discusses the mechanism of executive severance agreements,and preliminarily tests the effectiveness of executive severance agreements.It provides empirical evidence for Chinese localization of foreign scholars’ disputes over the study of executive severance agreements,and enriches the domestic literature research on the terms of executive severance agreements.In general,the research conclusions of this paper have important reference value for further perfecting and improving the executive compensation management system of listed companies in China and the short-termism behavior governance system of the company. |
