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Executive compensation and corporate fraud in China

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Executive compensation and corporate fraud in China. / Conyon, Martin; He, Lerong.
In: Journal of Business Ethics, Vol. 134, No. 4, 04.2016, p. 669-691.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

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Conyon, M & He, L 2016, 'Executive compensation and corporate fraud in China', Journal of Business Ethics, vol. 134, no. 4, pp. 669-691. https://doi.org/10.1007/s10551-014-2390-6

APA

Vancouver

Conyon M, He L. Executive compensation and corporate fraud in China. Journal of Business Ethics. 2016 Apr;134(4):669-691. Epub 2014 Dec 4. doi: 10.1007/s10551-014-2390-6

Author

Conyon, Martin ; He, Lerong. / Executive compensation and corporate fraud in China. In: Journal of Business Ethics. 2016 ; Vol. 134, No. 4. pp. 669-691.

Bibtex

@article{2092c63498d94f51b9e9936f4d11b31c,
title = "Executive compensation and corporate fraud in China",
abstract = "This study investigates the relation between CEO compensation and corporate fraud in China. We document a significantly negative correlation between CEO compensation and corporate fraud using data on publicly traded firms between 2005 and 2010. Our findings are consistent with the hypothesis that firms penalize CEOs for fraud by lowering their pay. We also find that CEO compensation is lower in firms that commit more severe frauds. Panel data fixed effects and propensity score methods are used to demonstrate these effects. Our results also indicate that corporate governance mechanisms influence the magnitude of punishment. We find that CEOs of privately controlled firms, firms that split the posts of CEO and chairman, and CEOs of firms located in developed regions suffer larger compensation penalties for committing financial fraud. Finally, we show that CEOs at firms that commit fraud are more likely to be replaced compared to those at non-fraud firms.",
keywords = "Financial fraud, executive compensation, corporate governance, China",
author = "Martin Conyon and Lerong He",
year = "2016",
month = apr,
doi = "10.1007/s10551-014-2390-6",
language = "English",
volume = "134",
pages = "669--691",
journal = "Journal of Business Ethics",
issn = "0167-4544",
publisher = "Springer Netherlands",
number = "4",

}

RIS

TY - JOUR

T1 - Executive compensation and corporate fraud in China

AU - Conyon, Martin

AU - He, Lerong

PY - 2016/4

Y1 - 2016/4

N2 - This study investigates the relation between CEO compensation and corporate fraud in China. We document a significantly negative correlation between CEO compensation and corporate fraud using data on publicly traded firms between 2005 and 2010. Our findings are consistent with the hypothesis that firms penalize CEOs for fraud by lowering their pay. We also find that CEO compensation is lower in firms that commit more severe frauds. Panel data fixed effects and propensity score methods are used to demonstrate these effects. Our results also indicate that corporate governance mechanisms influence the magnitude of punishment. We find that CEOs of privately controlled firms, firms that split the posts of CEO and chairman, and CEOs of firms located in developed regions suffer larger compensation penalties for committing financial fraud. Finally, we show that CEOs at firms that commit fraud are more likely to be replaced compared to those at non-fraud firms.

AB - This study investigates the relation between CEO compensation and corporate fraud in China. We document a significantly negative correlation between CEO compensation and corporate fraud using data on publicly traded firms between 2005 and 2010. Our findings are consistent with the hypothesis that firms penalize CEOs for fraud by lowering their pay. We also find that CEO compensation is lower in firms that commit more severe frauds. Panel data fixed effects and propensity score methods are used to demonstrate these effects. Our results also indicate that corporate governance mechanisms influence the magnitude of punishment. We find that CEOs of privately controlled firms, firms that split the posts of CEO and chairman, and CEOs of firms located in developed regions suffer larger compensation penalties for committing financial fraud. Finally, we show that CEOs at firms that commit fraud are more likely to be replaced compared to those at non-fraud firms.

KW - Financial fraud

KW - executive compensation

KW - corporate governance

KW - China

U2 - 10.1007/s10551-014-2390-6

DO - 10.1007/s10551-014-2390-6

M3 - Journal article

VL - 134

SP - 669

EP - 691

JO - Journal of Business Ethics

JF - Journal of Business Ethics

SN - 0167-4544

IS - 4

ER -