The Effects of Board and Executive Incentive Systems on Corporate Growth: Evidence from China’s Agricultural and Agro-processing Industry

Abstract

Aims: It tests the impact of board governance and executive incentive mechanisms on corporate growth, as well as their contemporaneous and lagged effects. Place and Duration of Study: Studying at Xiamen University Tan Kah Kee College since September 2022., Methodology: Taking A-share listed companies in China's agriculture and agricultural product processing industry from 2020 to 2024 as samples, this paper adopts the methods of multiple linear regression and quantile regression. Conclusion: Compensation incentives exhibit an overall positive impact on firms’ sustainable growth; however, the contemporaneous effect is insignificant, while the one-period lagged effect is statistically significant. Equity incentives show differentiated lagged effects: executive shareholding promotes firm growth, whereas board shareholding suppresses it. Quantile regression further reveals that board compensation incentives are more effective in high-growth firms, while low-growth firms benefit more from reducing their asset–liability ratio. Control variables such as firm size, revenue growth, and state ownership positively correlate with growth, while leverage exerts a significant negative influence.