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Does CEO pay dispersion matter in an emerging market? Evidence from China’s listed firms

Journal Article


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Abstract


  • This paper examines how the institutional features of emerging economies (i.e., government ownership, political connections, and market reform) influence CEO pay-dispersion incentives. Consistent with our expectation, we find that CEO pay dispersion generally provides a tournament incentive in China's emerging market, as it is positively associated with firm performance. In addition, tournament incentives are weaker where firms are controlled by the government and where the CEO is politically connected, but it became stronger after the China's split-share structure reforms. Further, we find that in state controlled firms the satisfaction gained by meeting multiple economic and social goals largely reduces the effectiveness of tournament incentives, while the managerial agency problems inherent in private firms might mitigate them.

UOW Authors


  •   Hu, Fang (external author)
  •   Pan, Xiaofei
  •   Tian, Gary G. (external author)

Publication Date


  • 2013

Citation


  • Hu, F., Pan, X. & Tian, G. (2013). Does CEO pay dispersion matter in an emerging market? Evidence from China’s listed firms. Pacific-Basin Finance Journal, 24 235-255.

Scopus Eid


  • 2-s2.0-84881267214

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1203&context=buspapers

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/201

Has Global Citation Frequency


Number Of Pages


  • 20

Start Page


  • 235

End Page


  • 255

Volume


  • 24

Place Of Publication


  • Netherlands

Abstract


  • This paper examines how the institutional features of emerging economies (i.e., government ownership, political connections, and market reform) influence CEO pay-dispersion incentives. Consistent with our expectation, we find that CEO pay dispersion generally provides a tournament incentive in China's emerging market, as it is positively associated with firm performance. In addition, tournament incentives are weaker where firms are controlled by the government and where the CEO is politically connected, but it became stronger after the China's split-share structure reforms. Further, we find that in state controlled firms the satisfaction gained by meeting multiple economic and social goals largely reduces the effectiveness of tournament incentives, while the managerial agency problems inherent in private firms might mitigate them.

UOW Authors


  •   Hu, Fang (external author)
  •   Pan, Xiaofei
  •   Tian, Gary G. (external author)

Publication Date


  • 2013

Citation


  • Hu, F., Pan, X. & Tian, G. (2013). Does CEO pay dispersion matter in an emerging market? Evidence from China’s listed firms. Pacific-Basin Finance Journal, 24 235-255.

Scopus Eid


  • 2-s2.0-84881267214

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1203&context=buspapers

Ro Metadata Url


  • http://ro.uow.edu.au/buspapers/201

Has Global Citation Frequency


Number Of Pages


  • 20

Start Page


  • 235

End Page


  • 255

Volume


  • 24

Place Of Publication


  • Netherlands