The Impact of Executive Pay Rigidity on Corporate Risk-Taking: A Multiple Case Study Based on Industrial and Ownership Heterogeneity
DOI:
https://doi.org/10.54097/87xwr663Keywords:
Executive Pay Rigidity; Corporate Risk-Taking; Nature of Ownership; Multiple Case Study; Financing Strategy.Abstract
This study investigates the influence of executive pay rigidity on corporate risk-taking, focusing specifically on the moderating roles of industry characteristics and ownership nature. A comparative case study method is employed, examining three Chinese listed companies: Sanqi Interactive Entertainment, PetroChina and Hengrui Pharmaceuticals. These firms represent diverse industries and ownership structures. Findings indicate that pay rigidity significantly enhances risk-taking in privately-owned enterprises, whereas its effect is negligible in state-owned enterprises. Ownership type and financing strategies are found to jointly moderate this relationship. Privately-owned enterprises utilize flexible compensation contracts and higher equity financing ratios to align executive incentives with strategic risk-taking. In contrast, institutional constraints inherent in state-owned enterprises diminish the risk-inducing effect of pay rigidity. Industry-specific dynamics further shape these outcomes. High-growth sectors like the internet and pharmaceuticals adopt varied forms of pay rigidity to foster innovation and market expansion. Conversely, heavily regulated industries such as energy demonstrate limited responsiveness to performance variations. By developing an integrated analytical framework, this research contributes to the existing literature by elucidating how ownership structure, industry environment, and financing strategies collectively determine the effectiveness of pay rigidity as a risk management tool. The analysis is structured to meet the standards of a conference paper.
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