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| Research on the Influence of Executives’ Compensation Contract Reference Effect on the Corporation Stock Price Synchronicity |
| CHEN Yizao，CHEN Yan，HUANG Shihua，HAN Min |
| 1. Shandong University of Finance and Economics，Jinan，China；2. Dongbei University of Finance and Economics，Dalian，Liaoning，China） |
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Abstract Based on the data of listed companies in Shanghai and Shenzhen A shares from 2008 to 2019, this study explores the influence of executives’ compensation contract reference on the corporation’s stock price synchronicity. The results show that when the reference effect of executive compensation contracts is stronger, the company’s stock price synchronization is higher. The above effects mainly exist in vertical reference and horizontal reference dimensions. The mechanism of action shows that the contract reference effect of executives’ compensation affects the stock price synchrony of the corporation by affecting the information transparency of the corporation. Further research finds that the influence of executive compensation vertical reference is stronger than that of horizontal reference; In addition, institutional investor shareholding, audit quality, corporate internal controls, and executive promotion expectations can significantly inhibit the above influence. The economic consequence test finds that the influence of executive compensation contract reference on stock price synchronicity will further increase the corporation’s cost of equity capital and the decline of market value.
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Received: 22 August 2021
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