Effects of minimum wage policies on executive compensation contracts: An empirical analysis in China

IF 7.5 1区经济学 Q1 BUSINESS, FINANCE

International Review of Financial Analysis Pub Date : 2024-10-20 DOI:10.1016/j.irfa.2024.103682

Lei Jian , Meng Wang , Xiaojia Wang , Yan Zhang

引用次数: 0

Abstract

This paper investigates the impact of minimum wage policies on executive pay-for-performance sensitivity (PPS) in the compensation packages of A-share listed firms in China. Using data from 745 counties between 2007 and 2020, we find that minimum wage policies lead to a decrease in PPS. This finding remains robust through instrumental variable approaches, cross-border matching tests, alternative measurements, and other rigorous tests. Moreover, the negative impact of minimum wage on PPS is more pronounced in companies with higher labor dependency, limited ability to pass on labor costs to customers, and lower risk resilience. These results support the hypothesis that rising labor costs due to increased minimum wage, which lead to performance distortion and heightened risk, promote shareholders to reduce PPS to optimize compensation contracts for value maximization.

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最低工资政策对高管薪酬合同的影响：中国的实证分析

本文研究了中国 A 股上市公司薪酬方案中最低工资政策对高管绩效薪酬敏感性（PPS）的影响。利用 2007 年至 2020 年间 745 个县的数据，我们发现最低工资政策导致 PPS 下降。通过工具变量法、跨境匹配检验、替代计量法和其他严格检验，这一结论仍然是稳健的。此外，最低工资对 PPS 的负面影响在劳动力依赖度较高、将劳动力成本转嫁给客户的能力有限以及抗风险能力较低的企业中更为明显。这些结果支持了这样的假设，即最低工资的提高导致劳动力成本上升，从而导致绩效扭曲和风险增加，促使股东降低 PPS 以优化薪酬合同，实现价值最大化。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Review of Financial Analysis BUSINESS, FINANCE-

CiteScore

10.30

自引率

9.80%

发文量

366

期刊介绍： The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.