A Study On The Impact Of Strong Anti-corruption On Paying For Luck

"Pay for luck" refers to the salary that executives do not have to work hard due to the changes in the macro environment.Existing studies have mainly discussed the problem about how to solve the performance and incentive mismatch caused by pay-for-luck from two perspectives:(1)pay-for-luck is the result of corporate governance defects,so strengthening corporate governance has become the inevitable choice to solve pay-for-luck;(2)pay-for-luck is not caused by corporate governance defects,in order to solve this problem,it needs to rely on legal system and social media supervision and other mechanisms.Since the 18 th National Congress of the Communist Party of China,the Party and the state have strengthened the governance of corruption,and the anti-corruption efforts have been greatly strengthened compared with the past.Not only corrupt officials have been sacked,but also the management of enterprises have been dealt with by Party discipline and state law because of bribery and corruption.The strengthening of anti-corruption by the central government undoubtedly has a profound impact on the institutional environment of the company.Based on China’s institutional background,this paper takes strong anti-corruption as an exogenous event to study its impact on the executive pay-for-luck of listed companies.Taking A-share listed companies from 2005 to 2020 as research samples,this paper empirically tests the impact of strong anti-corruption on executive pay-for-luck.This paper establishes a regression model by using the research methods of Bertrand and Mullainathan(2006),Garvey and Milbourn(2006)and Daniel et al.(2020)for reference.The test results show that:(1)it is a commom phenomenon existed in listed companies of pay-for-luck in China;(2)pay-for-luck presents an asymmetric phenomenon,that is,the increase in pay from good luck exceeds the decline in pay from bad luck;(3)Strong anti-corruption effectively reduces executive pay-for-luck and enhances the correlation between performance and executive compensation.The research of this paper not only enriches the research of executive pay-for-luck,but also provides empirical evidence for anti-corruption and reducing executive pay-for-luck.The research conclusions and policy recommendations of this paper have important practical significance for improving the correlation between the performance of listed companies and executive compensation,and also for promoting the efficiency and fairness of social wealth distribution.