Performance compensation commitment agreements are suitable to improve the M&A market system, therefore, improve compliance with the business performance commitment. The study analyzes the impact of establishing performance commitments on the effect of implementation of commitments from compensation payment method, compensation time, and compensation direction.

It analyzes the relationship between the mode of compensation and the information asymmetry of science and technology companies.

The result is that stock compensation, annual compensation, and bidirectional compensation are more conducive to meeting performance commitments. The incentive effect of two-way compensation is more obvious in companies with high corporate governance quality, while the heterogeneity of debt repayment pressure has no effect on the incentive effect of two-way compensation.

The article has an adequate structure, and pertinent references. However, a limited contribution to a new business strategy in the field of study.

Author Response

Thank you for your review. The following is my revised manuscript.

Author Response File: Author Response.docx

Reviewer 2 Report

General comments:

I started my review with a general analysis of this research article in the context of elements such as: a structure of the article, abstract, introduction, literature review, and methodology, the results of the research, discussion, conclusions, limitations and future directions of the research. All these elements are prepared out in this article.

In my opinion, the Authors undertake actual and interesting problem of Enterprise Transformation and Innovation in the context of Performance Compensation from the Perspective of Information Asymmetry.

The content of the article is coherent with the topic.

The cited references are relevant to the topic of the article but the Bibliography could be longer, more sources; 25 sources is not enough in this kind of article. The authors should show a greater knowledge of sources related to the analyzed issues (min. 50 sources).

The manuscript’s results are presented clearly and understandably but below all tables the Authors should write – the source (e.g., Source: Own elaboration).The Conclusions are consistent with the evidences and arguments presented in the article. The Authors described the future directions of research related to the analyzed issues. Well prepared conclusions.

Notes to be included in fixes [adjustments]:

-In Abstract it should be written the aim/purpose of the article

-In the introduction (in the research article), the Authors should clearly state the purpose of the article and also the research question(s)/research problem(s).

- The results of the conducted literature research on the analyzed issues are clearly presented with reference to current and latest publications (but in my opinion, the Authors should use more sources and the bibliography must be longer; min. 50 sources).

- Below all tables the Authors should write – the source (e.g., Source: Own elaboration). Sources should always be described under tables and figures, e.g. own study based on research. This should be supplemented.

Minor editing of English language required

Author Response

Thank you for your valuable advice. I have revised it one by one in the article, and the specific revision explanation is below.

1.In Abstract it should be written the aim/purpose of the article

Thank you for your review. The purpose of writing the article in the abstract : The purpose of this paper is to explore how scientific and technological enterprises choose performance compensation methods from the perspective of information asymmetry, using regression analysis on unbalanced panel data of A-share listed companies that have signed performance compensation agreements between 2014 and 2021.

2.In the introduction (in the research article), the Authors should clearly state the purpose of the article and also the research question(s)/research problem(s).

Thank you for your review. Explain the purpose of the article and the research questions in the introduction：This paper starting from the agreement itself, focusing on the internal subjective factors and from the perspective of information asymmetry examines the impact of performance compensation on the fulfillment of commitments. The purpose of this paper is to explore how scientific and technological enterprises choose performance compensation methods from the perspective of information asymmetry. Turn the impact into the degree of completion of commitments and the incentive effect of commitments. The paper also explores the relationship between these two factors and their influence mechanism, and put the research conclusions in science and technology enterprises for further verification, in order to provide reference for enterprise transformation, re-search on performance compensation commitment from the perspective of compensating for information asymmetry.

3.The results of the conducted literature research on the analyzed issues are clearly presented with reference to current and latest publications (but in my opinion, the Authors should use more sources and the bibliography must be longer; min. 50 sources).

Thank you for your review. About references, your advice is very comprehensive. I have expanded to 50.

4.Below all tables the Authors should write – the source (e.g., Source: Own elaboration). Sources should always be described under tables and figures, e.g. own study based on research. This should be supplemented.

Thank you for your review. At the bottom of the table, add the source.

Author Response File: Author Response.docx

Reviewer 3 Report

The introduction of this paper requires improvement to better engage and inform the reader about the topic proposed. The literature review is not presented quite well. I recommend that you consider the works of other authors. More papers are welcome as it shows that the raised issue has widely importance.

Please provide a short description of further research.

To provide a comprehensive assessment of the research value, it would be necessary to analyze the results within the broader context of existing literature and take into consideration the opinions of more experts in the field.

Author Response

1.The introduction of this paper requires improvement to better engage and inform the reader about the topic proposed.

Thank you for your review. As for the improvement of the introduction, I divide the whole introduction into four parts. The first is the first paragraph and the second paragraph, which leads to the research background and importance-the information asymmetry in M & A, and the research performance commitment can help to make up for the information asymmetry. Then there are the third and fourth paragraphs, which review the relevant literature and establish the existing research gaps. Next is the fifth paragraph, which explains the purpose of the study, studies the problems, and makes up for the gaps. The last part is the contribution of this paper and the structure of the article.

2.The literature review is not presented quite well. I recommend that you consider the works of other authors. More papers are welcome as it shows that the raised issue has widely importance.

Thank you for your review. With regard to the literature review, I have referred to the research of more scholars and improved my literature review, as follows: With the application of blockchain technology, performance pay is becoming more and more popular in mergers and acquisitions [5]. Similar to the VAM protocol, it acts as a valuation adjustment mechanism [6], which can reduce the valuation premium to a certain extent [7]. In 2005, China's listed companies applied this system for the first time in the process of share structure reform [8]. Most literature on performance commitment is researched from the perspective of salary incentives. The scholars started with the compensation of executives and found that there is a positive correlation between the compensation structure of the acquisition manager and the stock price before and after the announcement of the acquisition [9]. Some scholars have also studied the impact of performance commitment on firms. Relevant researchers studied the relationship between performance commitment and corporate performance, and found that a reasonable performance compensation commitment can motivate the target company to improve the performance of the acquirer [10]. The scholars studied the impact of performance commitment on earnings management [11]. The results show that performance commitment improves the earnings management level of backdoor listed companies. A case analysis found that companies that signed performance commitments may have behaviors such as premiums, good-will impairment risks, and earnings management after the commitment period [12]. The scholars studied the factors that affect the use of pay for performance, and the study showed that pay for performance is more likely to be used for acquisitions if the target company is a small private company [13].

Research on information asymmetry in M & A, the scholars studied the relation-ship between information asymmetry and M & A time [14]. The results show that the problem of information asymmetry is more serious before the completion of M & A and will be weakened after M & A. This is similar to the conclusion of the scholars that studied the impact of M & A on banking information asymmetry [15], and found that information asymmetry increases after M & An announcement and decreases after transaction completion, and successful M & A will improve the quality of the information environment. The scholars studied the information asymmetry in cross-border acquisitions and found that market support institutions usually reduce information asymmetry and shorten the arbitration stage [16]. The scholars analyzed the relation-ship between M & A goodwill and information asymmetry [17], and found that the value of goodwill affects the risk of stock price collapse through information asymmetry at the enterprise and market level. The scholars believes that the problem of information asymmetry in M & A can be solved by reasonable means of payment [18].

However, a significant portion of research on performance commitment primarily centers on its influence on enterprises, leaving a noticeable gap in understanding the factors that influence the effectiveness of these commitments. The implementation of performance compensation commitments within enterprises has led to the gradual refinement of commitment terms. The choice of compensation methods can yield varying impacts on the successful fulfillment of these commitments. Among the existing research, the predominant focus lies on equity payment and two-way compensation as performance compensation methods. While these studies often analyze their effects on overall enterprise management, they often fall short of delving into the underlying mechanisms that drive these impacts. This points to a notable deficiency in the literature, as there is a distinct lack of exploration into the intricate impact mechanisms resulting from these subjective factors.

3.Please provide a short description of further research.

Thank you for your review. As for further research, I mainly study the influence mechanism of performance compensation on commitment fulfillment and the influence mechanism of commitment compensation on information asymmetry, to further study the relationship among performance compensation, commitment fulfillment and information asymmetry, so as to help enterprises to make a better choice when signing M & An agreements. With regard to further research in the future, in the context of the current digital transformation, the application of digital technology in the fields of finance and accounting should be strengthened. M & An is also a driving force of enterprise transformation. In the future, we can further study the choice of M & A mode under the digital background, and how to speed up the digital transformation of enterprises.

Author Response File: Author Response.docx

Round 2

Reviewer 3 Report

the second review of this revision meet all the requirements. I propose to accept this scientific article for publication.

Article Menu

Enterprise Transformation and Innovation: A Study of Performance Compensation from the Perspective of Information Asymmetry

Further Information

Guidelines

MDPI Initiatives

Follow MDPI