Abstract
We investigate some aspects of top management pay in China's listed firms. We find positive pay and performance sensitivities and elasticities for top executives. In terms of magnitude, these sensitivities are similar to those reported in U.S. firms during the 1970s. However, the pay and performance relation is slightly weaker for firms located in less developed provinces. We also find that the pay disparities between top managers and employees are positively related to a firm's performance. Thus, it appears that any deviation away from a manager-worker compensation norm has to be justified by superior firm performance. In additional analyses, we find that managers' perquisites are not related to performance.
| Original language | English |
|---|---|
| Pages (from-to) | 852-866 |
| Number of pages | 15 |
| Journal | Journal of Empirical Finance |
| Volume | 17 |
| Issue number | 5 |
| DOIs | |
| Publication status | Published - 1 Dec 2010 |
Funding
sWe thank the editor, Theo Vermaelen, and the reviewer for helpful comments on the paper. We also thank Ronald Masulis and seminar participants at Vanderbilt University, City University, Zhongshan University, and Lingnan University for helpful comments on previous versions of the paper. Firth acknowledges financial support from the government of the HKSAR (LU340307).
Keywords
- Executive pay; Relative compensation; Performance sensitivities and elasticities; Perquisites; China