Managerial Power and Executive Compensation Stickiness
GAO Wen liang 1, LUO Hong 2, CHENG Pei xian 1
(1.Accounting Department, Hebei Finance University, Baoding 071051, China; 2.School of Accounting, Southwestern University of Finance and Economics, Chengdu 611130, China)
Abstract
“Optimal contract theory” and “managerial power theory” are the two main theoretical bases in the research field of the incentives of managers. Just like the managerial compensation in foreign capital market, the executive compensation in the listed companies of our country has the characteristic of stickiness, which does not match with the view of “optimal contract theory”. Compensation stickiness refers to that the sensitivity of executive compensation to performance has the asymmetry feature. When performance increases, the rate of salary increase is significantly higher than the rate of salary decrease when performance reduces. The authors found that the salary of executives in enterprises where managers have more power is significantly higher than that in enterprises where managers have less power and has higher compensation stickiness.
2011, Vol. 28 
