Effect of Managerial Discretion on CEO Pay-performance Sensitivity

摘要

Both Chinese and foreign scholars have discussed many factors that affect CEO pay-performance sensitivity.However,the persistently low CEO payperformance sensitivity is still not explained effectively.From the perspective of internal governance structure,managerial discretion is introduced as a variable comprehensively reflecting corporate governance quality into traditional Hermalin model and a new theoretical model focusing on the effect of managerial discretion on CEO pay-performance sensitivity is constructed.Based on the model,the paper finds that managerial discretion can affect CEO pay-performance sensitivity negatively to a great deal.