Wanlin Chen

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Management School, Jinan University, Guangzhou, China.
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Abstract: Based on the launch of short selling in our country as the background, using the data of the a-share listed company from 2007 to 2016 in China, we built the model and empirically proved the impact of short selling on the target company executive compensation contracts. And then we discussed how the different supervision mechanism and the management rights affected their relationship. This paper finds out that the implementation of short selling improved Executive Pay-for-performance Sensitivity of the target company. In the weak supervision mechanism of listed companies, short selling can significantly improve the Executive Pay-for-performance Sensitivity, while in strong supervision mechanism of listed companies, short selling can’t play a role; further from management right consideration, we found that in the higher management rights of listed companies, short selling can significantly improve its Executive Pay-for-performance Sensitivity, and in lower management rights of the listed company, short selling has no significant influence on management compensation contracts.

Keywords: Short Selling, Executive Pay-for-Performance Sensitivity

Cite this paper: Chen, W. (2018) Short Selling and Executive Pay-for-Performance Sensitivity. American Journal of Industrial and Business Management, 8, 1007-1021. doi: 10.4236/ajibm.2018.84069.

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