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ID: 093850

Are stronger executive incentives associated with cross-listing / Chi, Wei; Zhang, Haiyan

Chi, Wei	Journal Article
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Publication

2010.

Summary/Abstract

This study examines whether firms incorporated in mainland China benefit from cross-listing in Hong Kong, China. The Hong Kong Stock Market has more stringent rules regarding corporate governance and a better system of investor protection than the mainland market. Hong Kong companies generally provide strong incentives to executives via equity-based compensation. Have cross-listed companies learned from Hong Kong firms about adopting these strong executive incentives? The evidence from this study suggests that changes in top executive compensation are more sensitive to sales growth in cross-listed firms than they are in mainland firms without cross-listing. However, compared to Hong Kong firms, cross-listed firms are less sensitive to stock returns. Further, this study shows that it is necessary to differentiate between state-owned companies and private companies, as cross-listing may have a greater impact on executive incentives in state-owned companies than it does in private companies.

Key Words

Corporate Governance ; Cross - Listing ; Executive Compensation

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ID: 120624

How do market forces affect executive compensation in Chinese s / Fang Hu; Tan, Weiqiang; Xin, Qingquan; Yang, Sixian

Tan, Weiqiang	Journal Article
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Publication

2013.

Summary/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.

Key Words

China ; Executive Compensation ; Market - Oriented Reform ; Pay - Performance Sensitivity

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ID: 161863

Managerial diversion, product market competition, and firm performance / Li, Guangzhong

Li, Guangzhong	Journal Article
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Summary/Abstract

We derive the conditions under which a manager will divert and how managerial diversion affects product market performance and firm profits. Our model predicts that managerial diversion is more likely to occur and leads to more aggressive product market behavior in a firm with weak incentives and corporate governance. In these firms, the relation between managerial diversion and firm profits is inverse U-shaped. Chinese state-owned manufacturing firms are used to test our theoretical model, and we find supportive evidence.

Key Words

China ; State-Owned Enterprises ; Executive Compensation ; Managerial Diversion ; Product Market Behavior

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