Research on the Impact of Peer Compensation Reference Effect on Executive Investment Decisions-Based on the Perspective of Investment Efficiency

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Bei Lyu


The executive compensation contract is essential for coordinating the interests of all parties and alleviating the principal-agent problem. Managers are not completely rational. They often look for a certain reference point for analysis and judgment when making decisions. The external reference point effect of the executive compensation contract is often Affect the investment behavior of executives. This study uses the 2012-2016 financial data of Chinese A-share listed companies as a sample to verify the existence of the reference point effect of external executive compensation in the same industry, and analyze the impact of external compensation reference points on investment efficiency. The following research conclusions are obtained through empirical analysis. First, there is a positive correlation between executive compensation and executive compensation in the same industry. Executives show strong economic and social preferences, and changes in executive compensation are affected by the level of compensation of corporate executives of the same industry, same property rights, and a similar scale. Second, the external reference point effect of executive compensation weakens investment efficiency. When the salary level of executives is lower than that of companies in the same industry, with the same property rights and similar scale, it will cause underinvestment and overinvestment, which will significantly reduce investment efficiency.

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Lyu, B. (2021). Research on the Impact of Peer Compensation Reference Effect on Executive Investment Decisions-Based on the Perspective of Investment Efficiency. Journal of International Studies, Prince of Songkla University, 11(2), 207–248. Retrieved from
Research Articles


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