Author(s)

Yulun Chen, Wenjing Huang, Mengxuan Wei

Corresponding Author

Yulun Chen

ABSTRACT

Based on the theory of corporate governance and principal-agent, this paper empirically examines the correlation between executive compensation incentive and the accuracy of corporate performance forecast by taking the data of China's A-share listed companies in Shanghai and Shenzhen from 2015 to 2020 as samples. The results show that the monetary compensation incentive and equity incentive are positively correlated with the accuracy of the performance forecast. The higher the proportion of equity compensation in the compensation structure, the higher the accuracy of the performance forecast. Further analysis shows that, compared with state-owned enterprises, equity incentive, monetary compensation, and compensation structure have more significant incentive effects on performance forecast accuracy in non-state-owned enterprises. This study enriched the relevant research on executive compensation and performance forecast, which is of certain significance to the in-depth governance effect played by the current corporate governance mechanism in China and provides a reference for the improvement of the accuracy of corporate performance forecast.

KEYWORDS

Accuracy of Performance Forecast, Executive Monetary Compensation Incentive, Equity Compensation Incentive, Executive Compensation Structure