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

Fang Hu, Weiqiang TAN*, Qingquan Xin, Sixian Yang

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    10 Citations (Scopus)

    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.

    Original languageEnglish
    Pages (from-to)78-87
    Number of pages10
    JournalChina Economic Review
    Volume25
    Issue number1
    DOIs
    Publication statusPublished - Jun 2013

    Scopus Subject Areas

    • Finance
    • Economics and Econometrics

    User-Defined Keywords

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

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