Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Executive Compensation and Corporate Governance in China
AU - Conyon, Martin
AU - He, Lerong
PY - 2011
Y1 - 2011
N2 - We investigate executivecompensation and corporategovernance in China's publicly traded firms. We also compare executive pay in China to the USA. Consistent with agency theory, we find that executivecompensation is positively correlated to firm performance. The study shows that executive pay and CEO incentives are lower in State controlled firms and firms with concentrated ownership structures. Boardroom governance is important. We find that firms with more independent directors on the board have a higher pay-for-performance link. Non-State (private) controlled firms and firms with more independent directors on the board are more likely to replace the CEO for poor performance. Finally, we document that US executive pay (salary and bonus) is about seventeen times higher than in China. Significant differences in US–China pay persist even after controlling for economic and governance factors.
AB - We investigate executivecompensation and corporategovernance in China's publicly traded firms. We also compare executive pay in China to the USA. Consistent with agency theory, we find that executivecompensation is positively correlated to firm performance. The study shows that executive pay and CEO incentives are lower in State controlled firms and firms with concentrated ownership structures. Boardroom governance is important. We find that firms with more independent directors on the board have a higher pay-for-performance link. Non-State (private) controlled firms and firms with more independent directors on the board are more likely to replace the CEO for poor performance. Finally, we document that US executive pay (salary and bonus) is about seventeen times higher than in China. Significant differences in US–China pay persist even after controlling for economic and governance factors.
KW - China
KW - Executive compensation
KW - Equity incentives
U2 - 10.1016/j.jcorpfin.2011.04.006
DO - 10.1016/j.jcorpfin.2011.04.006
M3 - Journal article
VL - 17
SP - 1158
EP - 1175
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
IS - 4
ER -