Top Management Team Power in China: Measurement and Validation

Bin Ke (), Xinshu Mao (), Bin Wang () and Luo Zuo ()
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Bin Ke: Department of Accounting, Business School, National University of Singapore, Singapore 119245
Xinshu Mao: Department of Accounting, Business School, Beijing Technology and Business University, 100048 Beijing, People’s Republic of China
Bin Wang: Department of Finance, Business School, Beijing Technology and Business University, 100048 Beijing, People’s Republic of China
Luo Zuo: Samuel Curtis Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853

Management Science, 2021, vol. 67, issue 10, 6602-6627

Abstract: We propose and validate a comprehensive measure of power for the top management teams (TMTs) of publicly listed Chinese firms. We show that our measure is positively associated with the four power dimensions developed by prior research for U.S. firms as well as three Asia-relevant power dimensions, including political capital, seniority, and gender. We find that our TMT power measure is a valid proxy for TMT power for both state-controlled firms and non-state-controlled firms. We also compare our TMT power measure with one alternative TMT power proxy based on executive compensation and find no evidence that the alternative proxy is better than our measure in capturing TMT’s true power. Further, we provide evidence that the divergence between our power proxy and the power proxy based on executive compensation reflects nonmarket institutional forces in China and has important implications for corporate outcomes.

Keywords: power; top management team; executive compensation; nonmarket institutional force; China (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:10:p:6602-6627

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