Document Type
Journal article
Source Publication
Journal of Empirical Finance
Publication Date
12-1-2010
Volume
17
Issue
5
First Page
852
Last Page
866
Publisher
Elsevier BV
Keywords
Executive pay; Relative compensation; Performance sensitivities and elasticities; Perquisites; China
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.
DOI
10.1016/j.jempfin.2010.06.002
Print ISSN
09275398
Funding Information
Firth acknowledges financial support from the government of the HKSAR (LU340307).
Publisher Statement
Copyright © 2010 Elsevier B.V. All rights reserved.
Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Language
English
Recommended Citation
Firth, M., Leung, T. Y., & Rui, O. M. (2010). Justifying top management pay in a transitional economy. Journal of Empirical Finance, 17(5), 852-866. doi: 10.1016/j.jempfin.2010.06.002