Anti-corruption Campaigns and Pay-performance Sensitivity: Evidence from Chinese Listed Companies. Issue 1 (2nd January 2023)

• Record Type: Journal Article
• Authors: Cheng, Maoyong; Meng, Yu
• Is Part Of: Emerging markets finance & trade. Volume 59:Issue 1(2023)
• Page Start: 192
• Page End: 217
• Publication Date: 2023-01-02
• Subjects: Anti-corruption campaign -- pay-performance sensitivity -- CEOs' compensation -- China; Balkan Peninsula -- Commerce -- Periodicals; Balkan Peninsula -- Foreign economic relations -- Periodicals; Europe, Central -- Commerce -- Periodicals; Europe, Central -- Foreign economic relations -- Periodicals; Europe, Eastern -- Commerce -- Periodicals; Europe, Eastern -- Foreign economic relations -- Periodicals; Turkey -- Commerce -- Periodicals; Turkey -- Foreign economic relations -- Periodicals; Asia -- Commerce -- Periodicals; Asia -- Foreign economic relations -- Periodicals; Eurasia -- Commerce -- Periodicals; Eurasia -- Foreign economic relations -- Periodicals; 382.05
• DOI: 10.1080/1540496X.2022.2088350
• Languages: English
• ISSNs: 1540-496X

Abstract

ABSTRACT: We explore whether anti-corruption campaigns affect pay-performance sensitivity (PPS) in Chinese listed companies. Using a detailed anti-corruption data set at the city level from 2012 to 2018, we find that anti-corruption campaigns lead CEOs to shield (justify) their compensation by increasing pay-performance sensitivity. This result passes a series of robustness tests and endogeneity concerns. Furthermore, channel tests show that anti-corruption campaigns increase pay-performance sensitivity via the deterrence effect and the contagion effect. Cross-sectional tests show that the positive relationship between anti-corruption campaigns and PPS is more pronounced in larger firms and firms that belong to oligopoly markets.