Department of Finance & Decision Sciences
How do market forces affect executive compensation in Chinese state-owned enterprises?
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.
China, Executive compensation, Market-oriented reform, Pay-performance sensitivity
Source Publication Title
China Economic Review
Hu, Fang, Weiqiang Tan, Qingquan Xin, and Sixian Yang. "How do market forces affect executive compensation in Chinese state-owned enterprises?." China Economic Review 25 (2013): 78-87.