Different effects of internal and external tournament incentives on corporate financial misconduct: Evidence from China

Zhong, Xi; Ren, Liuyang; Song, Tiebo

doi:10.1016/j.jbusres.2021.05.020

Cited by 27 publications

(40 citation statements)

References 75 publications

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“…Figure 1 illustrates the analytical framework of this study. (Zhong et al, 2021a) and those with missing data (Xu et al, 2019;Zhong et al, 2021b). After the above screening steps, we finally obtained 13,623 observations involving 2,402 firms.…”

Section: Accordingly We Proposementioning

confidence: 99%

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Founder CEOs, personal incentives, and corporate social irresponsibility

Zhong

Ren

2021

Business Ethics Env & Resp

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This study integrates organizational identity (OI) theory and upper echelons theory to explore the impact of CEOs' founder status on corporate social irresponsibility (CSI). We theorize that compared with other CEOs, a founder CEO is more likely to generate a high degree of OI with the firm, which will drive the founder CEO to actively avoid CSI that may damage the positive image and long-term development of the firm. Furthermore, we argue that CEO duality and CEO ownership will strengthen the aforementioned relationship by increasing the possibility of founder CEOs generating a high degree of OI. Conversely, CEO underpayment will weaken the relationship between founder status and CSI by decreasing the possibility of founder CEOs generating a high degree of OI. We obtained empirical evidence in support of our arguments from a large Chinese private listed company dataset. Overall, this study's theory and evidence clearly show that founder status and personal incentives can jointly shape CEOs' CSI decisions, thereby providing useful insights for corporate shareholders and government agencies to better prevent and govern firms' CSI.

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Section: Accordingly We Proposementioning

confidence: 99%

“…CEO duality was 1 if an enterprise's CEO also serves as board chairman and 0 otherwise (Wang et al, 2018;Zhong et al, 2021b); CEO ownership was measured by the ownership percentage of the CEO.…”

Section: Moderator Variablesmentioning

confidence: 99%

Founder CEOs, personal incentives, and corporate social irresponsibility

Zhong

Ren

2021

Business Ethics Env & Resp

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“…However, there has been little exploration of how negative signals unintentionally released by firms will affect core stakeholder support and recognition of the firm and the ultimate impact on firms’ innovation performance. This omission is unfortunate because many firms in management practice unintentionally send negative signals due to misbehavior (Cheng et al., 2020; Zhong et al., 2021a). Based on signaling theory (Spence, 1973), we extended the exploration of the above topic using corporate fraud as an entry point.…”

Section: Discussionmentioning

confidence: 99%

“…Industrial competition . Industrial competition is an important aspect of the institutional environment faced by firms (Zhong et al., 2021a) and reflects the extent to which a firm influences the survival of other firms in the industry (Andergassen, 2016). We argue that industrial competition will amplify the signaling effect of corporate fraud on firms’ innovation performance.…”

Section: Theoretical and Hypothesesmentioning

confidence: 99%

“…Although rarely explored, it is urgent and important to systematically explore the above topics. As one of the most serious ethical threats to the business environment, corporate fraud ‐ the violation of the securities regulation system, disclosure system, and securities trading system by listed companies in operating their companies and business ‐ is universal (Conrad & Holtbrügge, 2021; Stuart & Wang, 2016; Zhong et al., 2021a). For example, Stuart and Wang (2016) found that more than half of Chinese technology companies intentionally misrepresented their performance.…”

Section: Introductionmentioning

confidence: 99%

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Corporate fraud as a negative signal: Implications for firms’ innovation performance

Ren

Zeng

Song

2022

Business Ethics Env & Resp

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Based on signaling theory, we explore the impact of corporate fraud on firms' innovation performance. First, we propose that corporate fraud harms firms' innovation performance. This is because, as a negative signal, fraud makes it difficult for firms to obtain the policy, funding, and human resources needed for outstanding innovation performance. We further argue that the institutional aspects of the signaling environment (e.g., industrial competition, regional institutional development, and social trust) will influence core stakeholders' reception and interpretation of fraud signals. These factors, in turn, moderate the signaling effect of corporate fraud on firms' innovation performance. Our views are supported by empirical and robustness tests using Chinese A-share listed firms from 2010 to 2019.

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CEO industry tournament, investor attention, and company value

Jiang,

Deng

2024

Manage Decis Econ

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Based on the emerging capital market of China, this paper uses the data of Chinese listed companies to test the market value management behavior of CEOs under the incentive of industry tournaments. The empirical results show that the CEOs industry tournament improves the value of listed companies by attracting investor attention. In the test of the incentive mechanism of the industry tournament, we find that in the samples with lower industry mobility and state ownership and where the CEO is new, retiring, or a founder, the industry pay gap has a weaker incentive effect on the CEO. In the test of the CEOs' efforts to manage investor attention, this paper finds that CEOs are incentivized to disclose more financial and nonfinancial information, increase advertising spending, and hold more shareholder meetings. Discussed with other incentives, compensation incentives and equity incentives enhance the motivational role of industry championships for CEOs. This study explores in depth the possible impact of industry tournaments on CEO behavioral decisions and also provides a new perspective for corporate to manage investor attention. This provides important reference value for corporate CEO compensation, information disclosure supervision, and investor decision‐making.

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Different effects of internal and external tournament incentives on corporate financial misconduct: Evidence from China

Cited by 27 publications

References 75 publications

Founder CEOs, personal incentives, and corporate social irresponsibility

Founder CEOs, personal incentives, and corporate social irresponsibility

Corporate fraud as a negative signal: Implications for firms’ innovation performance

CEO industry tournament, investor attention, and company value

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