Abstract
| Original language | English |
|---|---|
| Publication status | Published - 6 Jan 2019 |
| Externally published | Yes |
| Event | The ASSA 2019 Annual Meeting - Georgia, Atlanta, United States Duration: 4 Jan 2019 → 6 Jan 2019 https://www.aeaweb.org/conference/2019 |
Conference
| Conference | The ASSA 2019 Annual Meeting |
|---|---|
| Country | United States |
| City | Atlanta |
| Period | 4/01/19 → 6/01/19 |
| Internet address |
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Restricting CEO Pay Backfires: Evidence from China. / BAE, Kee-Hong; GONG, Zhaoran; TONG, Wilson.
2019. Paper presented at The ASSA 2019 Annual Meeting, Atlanta, United States.Research output: Other Conference Contributions › Conference Paper (other)
TY - CONF
T1 - Restricting CEO Pay Backfires: Evidence from China
AU - BAE, Kee-Hong
AU - GONG, Zhaoran
AU - TONG, Wilson
PY - 2019/1/6
Y1 - 2019/1/6
N2 - Using the pay restriction imposed on CEOs of centrally administered state-owned enterprises (CSOEs) in China in 2009, we study the effects of limiting CEO pay. Compared with firms not subject to the restriction, the CEOs of CSOEs experience a significant pay cut. Pay-performance sensitivity for these firms also significantly decreases. In response to the pay cut, CEOs increase their consumption of perks and siphon off firm resources for their own benefit. Ultimately, the performance of these firms drops significantly following the pay restriction. Our findings suggest that restricting CEO pay distorts CEO incentives and brings unintended consequences. Our findings caution against limiting the pay of CEOs.
AB - Using the pay restriction imposed on CEOs of centrally administered state-owned enterprises (CSOEs) in China in 2009, we study the effects of limiting CEO pay. Compared with firms not subject to the restriction, the CEOs of CSOEs experience a significant pay cut. Pay-performance sensitivity for these firms also significantly decreases. In response to the pay cut, CEOs increase their consumption of perks and siphon off firm resources for their own benefit. Ultimately, the performance of these firms drops significantly following the pay restriction. Our findings suggest that restricting CEO pay distorts CEO incentives and brings unintended consequences. Our findings caution against limiting the pay of CEOs.
M3 - Conference Paper (other)
ER -