A High Salary for Integrity? Examining the Impact of the New Securities Law on A-Share Listed Companies

This research utilizes the Propensity Score Matching-Difference-in-Differences (PSM-DID) approach to investigate the impact of the new Securities Law on executive compensation within A-share listed companies, drawing on a decade-long panel dataset spanning from 2013 to 2023. The findings indicate that following the implementation of the new Securities Law, there was a notable enhancement in the congruence between executive decision-making and corporate objectives, evidenced by a decrease in executive salaries and a shift from base salary to equity compensation. Mechanism analysis reveals that the law reduces executives' incentives to engage in financial fraud by lowering equity concentration and management shareholding, leading to a decrease in executive pay. Specifically, the law achieves this by strengthening equity management regulations and imposing stricter restrictions on executive shareholding reductions, thereby weakening managerial incentives for financial misconduct.The implications of this study are multifaceted. For regulators, optimizing executive compensation structures can enhance financial fraud oversight. For firms, adopting equity-based incentives better align managerial interests with long-term corporate development. For investors, analyzing executive compensation structures offers insights into corporate governance quality and helps mitigate investment risks.