238
Views
1
CrossRef citations to date
0
Altmetric
Research Article

Negotiating or regulating executive compensation: application of Benford’s law

ORCID Icon, , &
Pages 785-789 | Published online: 22 Feb 2021
 

ABSTRACT

In this study, Benford’s law is used to examine whether the negotiation ability of executives can strongly influence the compensation level. In this paper, we analyse the executive compensation data of more than 3,000 Chinese listed companies from 1999 to 2017. The results indicated that Benford’s law can be used to distinguish performance-based compensations from basic salaries of executives. Some executives prefer to be paid in the form of integers. This study finds that violation of Benford’s law in private enterprises indicate that these executives have negotiating power or strong preferences. However, violation of Benford’s law in state-owned enterprises is due to restriction orders by the government to control the compensation of top executives. This result reveals the limitation of Benford’s law on manipulated numbers.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Philosophy and Social Science Research in Colleges and Universities in Jiangsu Province [2019SJZDA049].

Log in via your institution

Log in to Taylor & Francis Online

PDF download + Online access

  • 48 hours access to article PDF & online version
  • Article PDF can be downloaded
  • Article PDF can be printed
USD 53.00 Add to cart

Issue Purchase

  • 30 days online access to complete issue
  • Article PDFs can be downloaded
  • Article PDFs can be printed
USD 205.00 Add to cart

* Local tax will be added as applicable

Related Research

People also read lists articles that other readers of this article have read.

Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine.

Cited by lists all citing articles based on Crossref citations.
Articles with the Crossref icon will open in a new tab.