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Export diversification, CEO compensation and CEO pay-performance sensitivity: lesson from china

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Abstract

The main objective of the research is to investigate the impact of export divergence, and CEO-pay performance sensitivity on CEO compensation. We construct a new degree of export-related diversification for Chinese listed firms and find that higher levels of export-related diversification results in higher levels of CEO compensation. Moreover, export diversification enhances the CEO pay-performance sensitivity. Our findings are consistent with a variety of model assumptions, such as a Difference-In-Difference regression estimate that accounts for missing variables. Finally, we find evidence that export diversification increases CEO compensation by reducing information symmetry. The study on business diversity is expanded in this work, and it offers compelling indication of the link among such diversification and CEO recompense.

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Data availability

All results reported in this research was carried out in R-studio computational environment. Data used in this research are taken from WIND available online at: https://www.wind.com.cn/

Notes

  1. Ex is the predicted value of Divexp of next estimation:

    $${Div}_{it}={\delta }_{0}+{\delta }_{1}{\mathrm{Markdex}}_{it}+{\delta }_{2}{Divex{p}_{mean}}_{it}+{\delta }_{3}{Divex{p}_{med}}_{it}+\sum_{k=1}^{K}{\delta }_{K}{CONTROL}_{it}^{K}+{\theta }_{it} +{\theta }_{it}$$
    (3)

    Then we get the predicted value of \({Div}_{it}\) as ex to represent a new export diversification index. As the three IV (Markdex, Divexp_mean, Divexp_med) is exogenous, the predicted value of Div is a exogenous variable.

  2. \(Inf=sd(Aeps)/abs(Eps)\). In this equation \(sd\)(Aeps) represents the standard deviation of Aeps (earnings per share predicted by the analysts) and \(abs\)(Eps) represents the absolute value of \(Eps\)(the real value of return per share).

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Funding

This research was supported by The National Natural Science Foundation of China (Grant No.716630021).

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Author notes

  1. Licong Xing

    Present address: School of Economics and Management, Nanyang Normal University, Nanyang, 473061, China

Authors and Affiliations

  1. College of Management and Economics, Tianjin University, Tianjin, 300072, China

    Hui Dai

  2. Cooperative School of International Education, Tianjin University of Commerce, Tianjin, 300134, China

    Hui Dai

  3. School of International Trade and Economics, University of International Business and Economics, Beijing, 100029, China

    Licong Xing

  4. School of Statistics, Jiangxi University of Finance and Economics, Nanchang, China

    Yousaf Ali Khan

  5. Department of Mathematics and Statistics, Hazara University, Mansehra, Pakistan

    Yousaf Ali Khan

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Contributions

Conceptualization: Dai, H; Xing, L,: Methodology: Khan, YA: Formal analysis and (field/laboratory) investigation: Xing, L; Khan, YA,: Writing - original draft preparation: Xing, L: Writing - review and editing: Dai, H; Khan, YA.

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Correspondence to Yousaf Ali Khan.

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Table 10 Sobel Test
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Dai, H., Xing, L. & Khan, Y.A. Export diversification, CEO compensation and CEO pay-performance sensitivity: lesson from china. Curr Psychol 43, 8133–8148 (2024). https://doi.org/10.1007/s12144-023-04987-2

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