How Do Market Forces Affect Executive Compensation in Chinese State-owned Enterprises?
Author(s)
Hu, Fang
Tan, Weiqiang
Xin, Qingquan
Yang, Sixian
Griffith University Author(s)
Year published
2013
Metadata
Show full item recordAbstract
This paper studies how the evolution of market forces affects executive compensation in China's listed state-owned enterprises (SOEs) from 2000-2007. Along with the progress of market reforms we find that the level of executive compensation increases gradually and the relation between compensation and performance becomes more sensitive. However, the effect of market forces on executive compensation in SOEs is limited by CEOs' political connections. Our findings suggest that introducing exogenous market forces alone may not be sufficient to ensure the effectiveness of governance structure in a transition economy.This paper studies how the evolution of market forces affects executive compensation in China's listed state-owned enterprises (SOEs) from 2000-2007. Along with the progress of market reforms we find that the level of executive compensation increases gradually and the relation between compensation and performance becomes more sensitive. However, the effect of market forces on executive compensation in SOEs is limited by CEOs' political connections. Our findings suggest that introducing exogenous market forces alone may not be sufficient to ensure the effectiveness of governance structure in a transition economy.
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Journal Title
China Economic Review
Volume
25
Subject
Economics
Accounting, auditing and accountability not elsewhere classified