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Chinese executive compensation: the role of asymmetric performance benchmarks

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Chinese executive compensation : the role of asymmetric performance benchmarks. / Cordeiro, James; He, Lerong; Conyon, Martin James; Shankar Shaw, Tara.

In: European Journal of Finance, Vol. 22, No. 4-6, 2016, p. 484-505.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Harvard

Cordeiro, J, He, L, Conyon, MJ & Shankar Shaw, T 2016, 'Chinese executive compensation: the role of asymmetric performance benchmarks', European Journal of Finance, vol. 22, no. 4-6, pp. 484-505. https://doi.org/10.1080/1351847X.2013.769892

APA

Cordeiro, J., He, L., Conyon, M. J., & Shankar Shaw, T. (2016). Chinese executive compensation: the role of asymmetric performance benchmarks. European Journal of Finance, 22(4-6), 484-505. https://doi.org/10.1080/1351847X.2013.769892

Vancouver

Author

Cordeiro, James ; He, Lerong ; Conyon, Martin James ; Shankar Shaw, Tara. / Chinese executive compensation : the role of asymmetric performance benchmarks. In: European Journal of Finance. 2016 ; Vol. 22, No. 4-6. pp. 484-505.

Bibtex

@article{2acf1efabb8f40268c732bde492a8834,
title = "Chinese executive compensation: the role of asymmetric performance benchmarks",
abstract = "We study asymmetric performance benchmarking in Chinese executive compensation contracts between 2000 and 2010. We predict that while relative performance evaluation criteria are important in executive pay contracts, managerial power and influence will result in a decoupling between pay and performance. We predict that Chinese managers are rewarded for superior performance but not penalized for inferior performance. We test this asymmetric pay-for-performance hypothesis using three performance benchmarks: whether firm performance is positive/negative, above/below industry average, and above/below regional average. We find the sensitivity between executive compensation and firm accounting performance is asymmetric. It is significantly stronger when firm accounting performance is positive or firm performance exceeds industry or regional median benchmarks compared to cases when firm accounting performance is negative or is below industry or regional median benchmarks. We find little evidence that ownership structure and internal governance mechanisms moderate the asymmetric pay-for-performance relationship.",
keywords = "executive compensation, corporate governance, benchmarking, pay for performance, China",
author = "James Cordeiro and Lerong He and Conyon, {Martin James} and {Shankar Shaw}, Tara",
year = "2016",
doi = "10.1080/1351847X.2013.769892",
language = "English",
volume = "22",
pages = "484--505",
journal = "European Journal of Finance",
issn = "1351-847X",
publisher = "Routledge",
number = "4-6",

}

RIS

TY - JOUR

T1 - Chinese executive compensation

T2 - the role of asymmetric performance benchmarks

AU - Cordeiro, James

AU - He, Lerong

AU - Conyon, Martin James

AU - Shankar Shaw, Tara

PY - 2016

Y1 - 2016

N2 - We study asymmetric performance benchmarking in Chinese executive compensation contracts between 2000 and 2010. We predict that while relative performance evaluation criteria are important in executive pay contracts, managerial power and influence will result in a decoupling between pay and performance. We predict that Chinese managers are rewarded for superior performance but not penalized for inferior performance. We test this asymmetric pay-for-performance hypothesis using three performance benchmarks: whether firm performance is positive/negative, above/below industry average, and above/below regional average. We find the sensitivity between executive compensation and firm accounting performance is asymmetric. It is significantly stronger when firm accounting performance is positive or firm performance exceeds industry or regional median benchmarks compared to cases when firm accounting performance is negative or is below industry or regional median benchmarks. We find little evidence that ownership structure and internal governance mechanisms moderate the asymmetric pay-for-performance relationship.

AB - We study asymmetric performance benchmarking in Chinese executive compensation contracts between 2000 and 2010. We predict that while relative performance evaluation criteria are important in executive pay contracts, managerial power and influence will result in a decoupling between pay and performance. We predict that Chinese managers are rewarded for superior performance but not penalized for inferior performance. We test this asymmetric pay-for-performance hypothesis using three performance benchmarks: whether firm performance is positive/negative, above/below industry average, and above/below regional average. We find the sensitivity between executive compensation and firm accounting performance is asymmetric. It is significantly stronger when firm accounting performance is positive or firm performance exceeds industry or regional median benchmarks compared to cases when firm accounting performance is negative or is below industry or regional median benchmarks. We find little evidence that ownership structure and internal governance mechanisms moderate the asymmetric pay-for-performance relationship.

KW - executive compensation

KW - corporate governance

KW - benchmarking

KW - pay for performance

KW - China

U2 - 10.1080/1351847X.2013.769892

DO - 10.1080/1351847X.2013.769892

M3 - Journal article

VL - 22

SP - 484

EP - 505

JO - European Journal of Finance

JF - European Journal of Finance

SN - 1351-847X

IS - 4-6

ER -