Document Type

Journal Article

Department/Unit

Department of Finance and Decision Sciences

Title

How do market forces affect executive compensation in Chinese state-owned enterprises?

Language

English

Abstract

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. © 2013 Elsevier Inc.

Keywords

China, Executive compensation, Market-oriented reform, Pay-performance sensitivity

Publication Date

2013

Source Publication Title

China Economic Review

Volume

25

Start Page

78

End Page

87

Publisher

Elsevier

DOI

10.1016/j.chieco.2013.03.002

ISSN (print)

1043951X

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