Justifying top management pay in a transitional economy

Michael Firth, Tak Yan Leung and Oliver Rui

Journal of Empirical Finance, 2010, vol. 17, issue 5, 852-866

Abstract: We investigate some aspects of top management pay in China's listed firms. We find positive pay and performance sensitivities and elasticities for top executives. In terms of magnitude, these sensitivities are similar to those reported in U.S. firms during the 1970s. However, the pay and performance relation is slightly weaker for firms located in less developed provinces. We also find that the pay disparities between top managers and employees are positively related to a firm's performance. Thus, it appears that any deviation away from a manager-worker compensation norm has to be justified by superior firm performance. In additional analyses, we find that managers' perquisites are not related to performance.

Keywords: Executive; pay; Relative; compensation; Performance; sensitivities; and; elasticities; Perquisites; China (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:17:y:2010:i:5:p:852-866

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