Research On The Impact Of Executive Compensation Stickiness On Enterprise Risk-taking

At present,our government is vigorously promoting the conversion of the economic development mode,and pushing the economy from high-speed development to high-quality development.The key to an enterprise’s ability to gain a foothold in development at this time is whether executives can accurately grasp the development situation in the market,i.e.,the attitude they take when facing risks.Appropriate risk-taking can help enterprises increase their market share and gain more profits,which helps them achieve long-term development.Since the ownership and operation of a company are separated,the actual management decisions are controlled by the executives,so they play a key role in risky project decisions.Since the interests of shareholders and executives are not aligned,shareholders want to design a compensation mechanism that works well to promote the maximum convergence of their interests.However,executive compensation contracts may not deliver the desired incentive and discipline effects,creating the problem of asymmetric changes in pay and performance,or pay stickiness.Previous studies have shown that executive compensation stickiness reflects excessive power of corporate management and inadequate governance mechanisms.Then,if compensation is sticky,executives may give up risky projects that can bring long-term benefits to the firm for their own interests,thus negatively affecting the level of risk-taking.In order to investigate the impact of executive compensation stickiness on corporate risktaking level,this paper empirically explores the relationship between executive compensation stickiness and corporate risk-taking using 2016-2020 Shanghai and Shenzhen A-share listed companies as research samples,and also explores the moderating effect of executive team heterogeneity on the relationship between the two,and further analyzes the effect of executive compensation on corporate risk-taking under different industries,different equity nature and different executive shareholding levels We further analyze the impact of executive compensation stickiness on corporate risk-taking in different industries,different equity properties and different executive shareholding levels.The conclusions are as follows:(1)There is a significant negative relationship between executive compensation stickiness and corporate risk-taking,i.e.,as executive compensation stickiness increases,the risk taken by the firm increases.(2)The age heterogeneity,education heterogeneity,overseas background heterogeneity and functional background heterogeneity of the executive team significantly weaken the negative relationship between executive compensation stickiness and corporate risk-taking.(3)The impact of executive compensation stickiness on corporate risk-taking differs among firms with different industries,different equity properties and different levels of executive shareholding.The negative impact of pay stickiness on enterprise risk taking is more significant in manufacturing enterprises,state-owned enterprises and enterprises with high level of executive ownership.Finally,this paper summarizes the findings of the study on the basis of the empirical analysis and makes suggestions in terms of improving the compensation incentive mechanism,improving the monitoring mechanism for major decisions and continuously optimizing the internal structure of the top management team.This paper enriches the research on pay stickiness,corporate risk-taking level and executive team heterogeneity,with a view to providing references for the practice community to develop effective compensation contracts.