How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms

33 Pages Posted: 18 Feb 2007

See all articles by Michael Firth

Michael Firth

Lingnan University - Department of Finance and Insurance

Peter M.Y. Fung

Hong Kong Polytechnic University

Oliver M. Rui

China Europe International Business School (CEIBS)

Date Written: January 2007

Abstract

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

Suggested Citation

Firth, Michael and Fung, Peter M.Y. and Rui, Oliver M., How Ownership and Corporate Governance Influence Chief Executive Pay in China's Listed Firms (January 2007). Available at SSRN: https://ssrn.com/abstract=963697 or http://dx.doi.org/10.2139/ssrn.963697

Michael Firth

Lingnan University - Department of Finance and Insurance ( email )

Castle Peak Road
Tuen Mun, New Territories
Hong Kong
China
+852 2616 8160 (Phone)
+852 2466 4751 (Fax)

Peter M.Y. Fung

Hong Kong Polytechnic University ( email )

Hung Hom, Kowloon
Hong Kong

Oliver M. Rui (Contact Author)

China Europe International Business School (CEIBS) ( email )

699 Hong Feng Road
Pudong
Shanghai 201206
China
86-21-28905618 (Phone)
86-21-28905620 (Fax)

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

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