Executive-Employee Pay Gap and Academic Directors – A Chinese Study

34 Pages Posted: 18 Jan 2019 Last revised: 1 Apr 2019

See all articles by Hong Fan

Hong Fan

Saint Mary's University, Canada

Xiaofei Song

Saint Mary's University

Lei Zhou

Anhui University of Finance and Economics

Date Written: January 18, 2019

Abstract

This study investigates the impact of professor-directors on the executive-employee pay gap in public Chinese firms. University professors are generally believed to have higher standards of ethical and social responsibility by the public. Consistent with this view, we find there is a negative relationship between the executive-employee pay gap and the presence of professor-directors on board. This result is mainly driven by administrative professor directors. The strong political connections of the administrative professor-directors give them both the additional incentive and power to advocate for an executive-employee pay gap reduction. Empirical evidence seems to suggest that administrative professor-directors are successful in promoting employee pay while curbing executive compensation hikes, resulting a smaller executive-employee pay gap. On the other hand, the presence of non-administrative professor directors is associated with both higher executive compensation and higher employee pay, resulting in little change in the pay gap.

Keywords: Executive-employee pay gap, professor directors, administrative professor-directors

JEL Classification: M40, M48

Suggested Citation

Fan, Hong and Song, Xiaofei and Zhou, Lei, Executive-Employee Pay Gap and Academic Directors – A Chinese Study (January 18, 2019). 2019 Canadian Academic Accounting Association (CAAA) Annual Conference. Available at SSRN: https://ssrn.com/abstract=3318236

Hong Fan (Contact Author)

Saint Mary's University, Canada ( email )

923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

Xiaofei Song

Saint Mary's University ( email )

923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

Lei Zhou

Anhui University of Finance and Economics ( email )

Cao Shan Road No.962
Bengbu, Anhui 233030
China

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