IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v64y2024i5p4475-4514.html
   My bibliography  Save this article

Non‐controlling shareholder activism and executive pay‐for‐performance sensitivity: Evidence from the over‐appointment of directors in the Chinese market

Author

Listed:
  • Shengnan Li
  • Jiaqi Wang
  • Xinya Zheng
  • Chiyun Zhu

Abstract

We examine the impact of non‐controlling shareholder activism on the effectiveness of executive compensation contract, particularly focusing on the over‐appointment of directors in A‐share firms listed on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2021. We discover that such over‐appointments by non‐controlling shareholders significantly promote executive pay‐for‐performance sensitivity of these enterprises. This effect becomes even more pronounced in enterprises that display a weaker government intervention and media attention. Further mechanism analysis indicates that over‐appointments improve the effectiveness of compensation contract by improving the quality of accounting information and restraining executives' opportunistic behaviour. Our further research finds that over‐appointments by non‐controlling shareholders can effectively reduce executive compensation stickiness, while significantly increasing the absolute salary level of executives. There is no evidence to suggest that independent directors increase executive pay‐for‐performance sensitivity.

Suggested Citation

  • Shengnan Li & Jiaqi Wang & Xinya Zheng & Chiyun Zhu, 2024. "Non‐controlling shareholder activism and executive pay‐for‐performance sensitivity: Evidence from the over‐appointment of directors in the Chinese market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(5), pages 4475-4514, December.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:5:p:4475-4514
    DOI: 10.1111/acfi.13270
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.13270
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.13270?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:64:y:2024:i:5:p:4475-4514. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.