Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 69-91 |
| Journal | Emerging Market Review |
| Volume | 25 |
| DOIs | |
| Publication status | Published - Dec 2015 |
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Keywords
- executive compensation
- political economy
- state ownership
- market friction
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The political determinants of executive compensation : Evidence from an emerging economy. / Liang, Hao; Renneboog, Luc; Li Sun, Sunny.
In: Emerging Market Review, Vol. 25, 12.2015, p. 69-91.Research output: Contribution to journal › Article › Scientific › peer-review
TY - JOUR
T1 - The political determinants of executive compensation
T2 - Evidence from an emerging economy
AU - Liang, Hao
AU - Renneboog, Luc
AU - Li Sun, Sunny
PY - 2015/12
Y1 - 2015/12
N2 - In regulated economies, corporate governance mechanisms such as executive compensation are less driven by market-based forces but more subject to political influence. We study the political determinants of executive compensation for all listed Chinese firms in the context of an exogenous shock that removed market frictions in share-tradability. Under strong political constraints, state ownership reduced the managerial pay levels and increased pay-for-performance sensitivity (to asset-based benchmarks). Board independence and compensation committees do not curb managerial pay, and market-based factors do not have a significant influence. However, these effects reversed following the governance shock (removal of market frictions in share tradability).
AB - In regulated economies, corporate governance mechanisms such as executive compensation are less driven by market-based forces but more subject to political influence. We study the political determinants of executive compensation for all listed Chinese firms in the context of an exogenous shock that removed market frictions in share-tradability. Under strong political constraints, state ownership reduced the managerial pay levels and increased pay-for-performance sensitivity (to asset-based benchmarks). Board independence and compensation committees do not curb managerial pay, and market-based factors do not have a significant influence. However, these effects reversed following the governance shock (removal of market frictions in share tradability).
KW - executive compensation
KW - political economy
KW - state ownership
KW - market friction
U2 - 10.1016/j.ememar.2015.04.008
DO - 10.1016/j.ememar.2015.04.008
M3 - Article
VL - 25
SP - 69
EP - 91
JO - Emerging Market Review
JF - Emerging Market Review
SN - 1566-0141
ER -