Deferred Cash Compensation and Risk Taking: Evidence from the Chinese Banking Industry

46 Pages Posted: 17 Aug 2016

See all articles by Wei Jiang

Wei Jiang

Jinan University

Yunguo Liu

Sun Yat-sen University (SYSU)

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Yue Xu

Sun Yat-sen University (SYSU)

Date Written: August 14, 2016

Abstract

Using a sample of 172 bank managers from 14 listed Chinese commercial banks during the period 2006-2014, we examine the use of deferred executive compensation and find empirical evidence for the multi-period agency explanation. Specifically, we find before the 2010 regulation which mandated the use of deferred executive compensation, banks with high risk deferred executive compensation less, while banks with low risk deferred executive compensation more. After the 2010 mandatory regulation, banks deferred executive compensation more than before, and the effect of the regulation is stronger in banks with high risk than in banks with low risk. The prior literature on the deferred compensation practice mainly focuses on the developed markets. This study provides some evidence on the use of deferred executive compensation in the emerging markets.

Keywords: Deferred Compensation; Dynamic Compensation; Regulation; Multi-Period Agency

JEL Classification: G21; G32; M52

Suggested Citation

Jiang, Wei and Liu, Yunguo and Lobo, Gerald J. and Xu, Yue, Deferred Cash Compensation and Risk Taking: Evidence from the Chinese Banking Industry (August 14, 2016). 29th Australasian Finance and Banking Conference 2016, Available at SSRN: https://ssrn.com/abstract=2823261

Wei Jiang (Contact Author)

Jinan University ( email )

Huang Pu Da Dao Xi 601, Tian He District
Guangzhou, Guangdong 510632
China

Yunguo Liu

Sun Yat-sen University (SYSU) ( email )

Guangzhou, Guangdong
China

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Yue Xu

Sun Yat-sen University (SYSU) ( email )

Guangzhou, Guangdong
China

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