Abstract Agency problem is the main cause of cost stickiness in state-owned enterprise (SOE).Executive compensation incentives are expected to be an important mechanism to alleviate the agency problem.In view of this,we investigate the effect of executive compensation on cost stickiness.We find that,cost stickiness exists in Chinese SOE,and this phenomenon is mainly derived from managers’ opportunistic behavior.Executive compensation incentives can mitigate cost stickiness caused by agency problem,and good corporate governance environment can enhance the effect of executive compensation on reducing cost stickiness.Further study finds that the effect of executive compensation incentive varies by the different level of government control over SOE.
2015, Vol. 32 
