Independent directors, non-controlling directors, and executive pay-for-performance sensitivity: Evidence from Chinese non-state owned enterprises

Fangzhao Zhou, Yunqi Fan, Yunbi An and Ligang Zhong

Pacific-Basin Finance Journal, 2017, vol. 43, issue C, 55-71

Abstract: We investigate the monitoring effect of different types of board directors on executive pay-for-performance sensitivity in Chinese non-state owned enterprises (non-SOEs). We find that the board representation of non-controlling shareholders has a positive impact on executive pay-for-performance sensitivity, while independent directors have a negative impact on pay-for-performance sensitivity. We further find that the positive effect of non-controlling directors is mediated by the ownership level of non-controlling shareholders, and by the controlling shareholder-manager duality. Our empirical evidence suggests that non-controlling directors have a monitoring effect in Chinese non-SOEs, and independent directors do not. Finally, we document that when non-controlling shareholders have relatively high ownership, non-controlling directors are better able to monitor firms' operations, which in turn leads to better firm performance.

Keywords: Independent directors; Non-controlling directors; Pay-for-performance sensitivity (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X17300781
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:43:y:2017:i:c:p:55-71

DOI: 10.1016/j.pacfin.2017.02.003

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().