Executive compensation in family firms: The effect of multiple family members

Minying Cheng, Bingxuan Lin and Minghai Wei

Journal of Corporate Finance, 2015, vol. 32, issue C, 238-257

Abstract: We explore the conflicts between the controlling founder of a firm and her family members by studying how their ownership affects executive compensation differently. Using a sample of family firms in China, we find that the ownership of a controlling family owner is negatively correlated with the level of executive compensation and has a positive effect on pay-for-performance sensitivity. However, the ownership of other family members is positively associated with executive compensation and has a negative effect on pay-for-performance sensitivity. We find that when the quality of corporate governance is low and when other family members hold excess control rights in the firm, the unfavorable effect of other family members is more striking.

Keywords: Family firms; Ownership structure; Executive compensation; China (search for similar items in EconPapers)
JEL-codes: G3 G32 G34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:32:y:2015:i:c:p:238-257

DOI: 10.1016/j.jcorpfin.2014.10.014

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