Beyond Profits: How Government Ownership Shape the Pay Dispersion of the Top Management Team: Evidence from China

61 Pages Posted: 30 Jul 2018 Last revised: 13 Nov 2023

See all articles by Wei Jiang

Wei Jiang

Jinan University

Bin Ke

National University of Singapore

Hong Ru

Nanyang Business School, Nanyang Technological University

Yue Xu

Sun Yat-sen University (SYSU)

Date Written: April 30, 2023

Abstract

In this study, we examined the influence of government ownership on pay disparity within top management teams (TMT) of Chinese State-controlled Enterprises (SOEs) versus Chinese non-SOEs and its impact on firm performance. Consistent with the social-political perspective—which suggests that SOEs prioritize government-favored social and political objectives over maximizing shareholder value-we find that TMT pay dispersion is notably smaller in SOEs, especially in central government-controlled SOEs where top executives have high political advancement prospects. SOEs in cities prioritizing social harmony also have narrower TMT pay gaps. Although local labor markets influence pay dispersion in non-SOEs, this isn't the case for SOEs. We found that reduced TMT pay disparity in SOEs correlates with decreased firm performance, observed across both vertical and horizontal pay differences. Our results challenge conventional managerial compensation theories from market-driven economies.

Keywords: top management team; managerial pay dispersion; government ownership; firm performance; China

JEL Classification: D73, G30, L33

Suggested Citation

Jiang, Wei and Ke, Bin and Ru, Hong and Xu, Yue, Beyond Profits: How Government Ownership Shape the Pay Dispersion of the Top Management Team: Evidence from China (April 30, 2023). Available at SSRN: https://ssrn.com/abstract=3221600 or http://dx.doi.org/10.2139/ssrn.3221600

Wei Jiang (Contact Author)

Jinan University ( email )

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

Bin Ke

National University of Singapore ( email )

Mochtar Riady Building, BIZ 1, #07-30
15 Kent Ridge Drive
Singapore, 119245
Singapore
+6566013133 (Phone)

Hong Ru

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
(+65) 67904661 (Phone)

HOME PAGE: http://https://hongru.mit.edu/

Yue Xu

Sun Yat-sen University (SYSU) ( email )

Haizhu District
Guangzhou, Guangdong
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
296
Abstract Views
1,965
Rank
195,238
PlumX Metrics