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Legislative political connections and CEO compensation in China

Russell Fralich () and Hong Fan ()
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Russell Fralich: HEC Montreal
Hong Fan: Saint Mary’s University

Asian Business & Management, 2018, vol. 17, issue 2, No 2, 112-139

Abstract: Abstract In this paper, we argue that the characteristics of ties represent a boundary condition of resource-dependency theory for explaining the benefits of political connections. We support this contention with a study of the linkage between CEO compensation and two types of Chinese legislative political ties: the one to the National People’s Congress (NPC) and the other to the Chinese People's Political Consulative Committee (CPPCC). We find that political ties do not necessarily provide access to critical resources and guarantee higher compensation. Our results suggest that the two legislative political ties represent distinct sources of managerial power resulting in different relationships with CEO pay.

Keywords: China; CEO; Compensation; Political connection; Resource dependency (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1057/s41291-018-0034-x

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