Does Longer Duration of Executive Compensation Foster Investment Efficiency?
利用一项旨在促进长期导向的监管政策作为外生冲击，研究发现高管薪酬期限延长后，企业异常投资减少约10%，投资效率提升，尤其对薪酬委员会独立性较低的企业效果更明显。
In this paper, I examine whether longer duration of executive compensation influences investment decisions.I exploit a regulation designed to foster long-term orientation in executive compensation as an exogenous trigger to lengthen executives' incentive duration.I find that treated firms reduce their abnormal investment relative to control firms, implying an increase in investment efficiency.These results are robust to different measures of investment, several models of expected investment, and different plausible control groups.The treatment effect is economically significant, as the reduction in abnormal investment amounts to about 10% of mean investment.It appears that a mandated longer duration has the greatest effect on investment efficiency in firms that had a low degree of compensation committee independence before the shock.Further, it seems that the lower abnormal investment stems to a greater extent from reductions in over-investment.