Research on Institutional Investors and Executive Compensation Stickiness Based on Fixed Effect Model: A Case Study of Chinese Listed Companies

Abstract

Based on the relevant data of Chinese A-share listed companies from 2014 to 2018, this paper studies the relationship between institutional investors and executive compensation stickiness by using Excel and Stata15.0 software. By fixed effect model, the results show that the sensitivity of executive compensation to performance of listed companies in China is asymmetric, which means there is a sticky characteristic of executive compensation. With the continuous development of China capital market, institutional investors will significantly inhibit the stickiness of executive compensation; in addition, according to the degree of pressure sensitivity, institutional investors can be divided into bias-pressure-resistant institutional investors and bias-pressure-sensitive institutional investors, and the former has a stronger inhibition effect on executive compensation stickiness than the latter. Therefore, the participation of institutional investors can optimize the executive compensation system, thus further promoting the implementation of contract theory and the development of enterprises.