Uncertainty and CEO Reversal Manipulation of Remuneration

Abstract

Abstract: In reality, a CEO can manipulate compensation and obtain excess payment with the power. Then will a CEO exercise reversal manipulation and lower the excess compensation actively? Taking China's A-share listed companies during the period of 2010-2016 as samples, this paper explores the existence of CEO reversal manipulation of remuneration and the causes for reversal manipulation of remuneration. The findings show that a CEO would lower the excess compensation actively when the uncertainty of the firm is relatively higher, but this phenomenon only exists in the private firms. It is found through further study that the pressure on reputation formed by investor concern is the major possible reason why CEOs lower the excess compensation actively. This phenomenon is more significant in the leading enterprises in the industry; and the same is true if the CEO is older or better educated.

Key words: Uncertainty, reputation pressure, CEO power, reversal manipulation of remuneration

TAN Jin-song, QIN Shuai, CAO Hui-juan, KONG Xiang-ting. Uncertainty and CEO Reversal Manipulation of Remuneration[J]. JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS, 2020, 0(2): 122-135.

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