Hong Kong Stock Listing and the Sensitivity of Managerial Compensation to Firm Performance in State-Controlled Chinese Firms

33 Pages Posted: 18 Feb 2007 Last revised: 31 Jan 2011

See all articles by Bin Ke

Bin Ke

National University of Singapore

Oliver M. Rui

China Europe International Business School (CEIBS)

Wei Yu

The Chinese University of Hong Kong (CUHK)

Multiple version iconThere are 2 versions of this paper

Date Written: December 9, 2010

Abstract

We compare the sensitivity of managerial cash compensation to firm performance, the level of long term managerial incentives, and the sensitivity of CEO turnover to firm performance for three types of state-controlled Chinese firms: A shares (firms incorporated and listed in mainland China), H shares (firms incorporated in mainland China but listed in Hong Kong), and Red Chip shares (firms incorporated outside mainland China and listed in Hong Kong). We find no difference in the three pay-for-performance sensitivity measures between H shares and A shares. The cash pay-for-performance sensitivity and the level of long term managerial incentives are higher for Red Chip shares than for the other two firm types. However, the sensitivity of CEO turnover to firm performance is insignificant for all three firm types. Our study illustrates the complexity in the influence of mainland China’s versus Hong Kong’s institutional forces on state-controlled Chinese firms listed in Hong Kong.

Keywords: cross listing, executive compensation, government ownership, Hong Kong, China

JEL Classification: J33, J63, K22, N25, N45

Suggested Citation

Ke, Bin and Rui, Oliver M. and Yu, Wei, Hong Kong Stock Listing and the Sensitivity of Managerial Compensation to Firm Performance in State-Controlled Chinese Firms (December 9, 2010). Available at SSRN: https://ssrn.com/abstract=963268 or http://dx.doi.org/10.2139/ssrn.963268

Bin Ke (Contact Author)

National University of Singapore ( email )

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Oliver M. Rui

China Europe International Business School (CEIBS) ( email )

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HOME PAGE: http://https://www.ceibs.edu/rui-oliver

Wei Yu

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

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