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Executive Compensation and Corporate Governance in China

Conyon, Martin and He, Lerong (2011) Executive Compensation and Corporate Governance in China. Journal of Corporate Finance, 17 (4). pp. 1158-1175. ISSN 0929-1199

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Abstract

We investigate executivecompensation and corporategovernance in China's publicly traded firms. We also compare executive pay in China to the USA. Consistent with agency theory, we find that executivecompensation is positively correlated to firm performance. The study shows that executive pay and CEO incentives are lower in State controlled firms and firms with concentrated ownership structures. Boardroom governance is important. We find that firms with more independent directors on the board have a higher pay-for-performance link. Non-State (private) controlled firms and firms with more independent directors on the board are more likely to replace the CEO for poor performance. Finally, we document that US executive pay (salary and bonus) is about seventeen times higher than in China. Significant differences in US–China pay persist even after controlling for economic and governance factors.

Item Type: Article
Journal or Publication Title: Journal of Corporate Finance
Uncontrolled Keywords: China ; Executive compensation ; Equity incentives
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 53900
Deposited By: ep_importer_pure
Deposited On: 25 Jun 2012 14:38
Refereed?: Yes
Published?: Published
Last Modified: 19 Dec 2013 15:09
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/53900

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