How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms
33 Pages Posted: 18 Feb 2007
Date Written: January 2007
This article contributes to the international corporate governance literature by examining factors that affect CEO compensation in China. The article models of CEO pay based on an understanding of the unique economic and structural reforms undertaken by the privatized State Owned Enterprises. The findings show that CEO compensation depends, in part, on the firm's operating profits and this indicates that incentive systems are being used to motivate top managers. Corporate governance factors have a significant impact on CEO compensation, but they do so in ways that differ from those in other countries. Our conclusions are robust across different formulations of the basic model and they have public policy implications for China and other transitional economies that are moving away from state ownership of business enterprises.
Keywords: CEO compensation, Ownership, Corporate Governance
JEL Classification: G34, J33, J45
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