How can wage restriction order affect a firms' financialization?

Yan Xie, Juan Zhang, Kun Zhang and Yixin Ren

Finance Research Letters, 2025, vol. 72, issue C

Abstract: This paper employs Chinese A-share listed firms from 2011 to 2022 to investigate the correlation between the reform of the remuneration system, represented by the Wage Restriction Order, and the process of corporate financialization. The results emphasize that implementing the Wage Restriction Order can impede business financialization in terms of willingness and magnitude. Moreover, the Wage Restriction Order hinders corporate financialization by optimizing executives' compensation structure and reducing managers' short-sightedness. The diverse impacts of the Wage Restriction Order on corporate financialization arise from the labor costs mechanism.

Keywords: Compensation system reform; Corporate financialization; Wage restriction order (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015356

DOI: 10.1016/j.frl.2024.106506

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