This study examines whether Korean pension guidelines that limit the payment of director show practical policy effectiveness by improving corporate management efficiency. Specifically, this study examines stickiness of pay to determine whether opportunistic executive payment existed in firms where executive pay was above 50% of articles of incorporation, before the announcement of the Korean pension guidelines. Further, we examine how executive pay stickiness has changed after the implementation of Korean pension guidelines to check whether they have been effective in improving corporate management efficiency. We use data from 2011 to 2019 and determine that, prior to the announcement of Korean pension guidelines, firms who paid above 50% of articles of incorporation showed higher executive payment stickiness. This suggests that these firms had a more opportunistic payment structure. However, this stickiness disappears after the announcement of Korean pension guidelines in 2020, suggesting that the Korean pension guidelines for executive pay show policy effectiveness. However, in 2020, the majority of decision-making within firms was affected by the global pandemic; therefore, there exists a need for additional research using a sample unaffected by the impact of the pandemic.
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