The dynamic role of state governance in executive compensation in China

Julie Elston and Yingchao Zhang

International Journal of Corporate Governance, 2016, vol. 7, issue 3, 223-246

Abstract: This paper investigates the dynamic link between executive compensation and corporate governance of listed Chinese firms from 2003 to 2012. Empirical evidence supports agency theory predictions of a positive relationship between firm performance and executive compensation over the period of the study. Findings also indicate a dramatic shift in the relationship between state ownership and executive compensation over time. Consistent with previous studies, we find that state ownership is not significant prior to 2005; but analysing newly available data reveals a dramatic shift in and a negative impact of state ownership on compensation from 2006 to 2012. Empirical results also suggest that state ownership may act to mitigate agency problems by reducing executive compensation, as new independent board members, CEOs and to some degree the compensation committees, provide a counter balancing upward pressure on CEO compensation in recent years. From a policy perspective, robust findings also suggest that recent policy reforms targeted at strengthening the link between pay and performance have been successful.

Keywords: China; corporate governance; SOE; state-owned enterprises; time sensitivity; state governance; executive compensation; agency theory; firm performance; state ownership. (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=80682 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijcgov:v:7:y:2016:i:3:p:223-246

Access Statistics for this article

More articles in International Journal of Corporate Governance from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().