theory indicates that CEO compensation should be tied to firm performance so as to
align managers with shareholders’ interests. Earlier evidence of a pay–performance relationship
has been mixed. Among significant studies, Ciscel and Carroll (1980), Jensen and Murphy (1990)D. Li et al. / Research in International Business and Finance 21 (2007) 32–49 39
Table 1
Influence of board and shareholding structure on CEO compensation
Explanatory variables Expected sign
Corporate governance Managerial labor market
Board structure
Duality +
Board size +
Supervisory Board size +
Proportion of outside directors − +
Shareholding structure
CEO shareholding − +
State shareholding − −
Legal person shareholding − −
B shares shareholding − +
H shares shareholding − +
Control variables
Firm size +
Firm performance + +
CEO age + −
CEO tenure + +
The signs in the corporate governance column indicate the expected influence of the explanatory variables on CEO
compensation according to the agency viewpoint. The signs in the managerial labor market column suggest the influence
of the same variables from the perspective of China’s convergence towards global pay standards for managerial talent.
and Core et al. (1999) find that executive total compensation is positively related to firm performance.
Hall and Liebman (1998) indicate that the pay–performance relationship has strengthened
over time, and is nowmostly generated by share and stock options ownership. In the case of China,
the little use of stock market-based compensation schemes argues in favor of a stronger relationship
between performance and CEO compensation through cash (bonus) payments.11
2.4. Summary
Table 1 summarizes the influence of the explanatory variables on CEO compensation. The
second column indicates the expected effect on CEO compensation from a corporate governance
perspective. The third column provides the expected effect on CEO compensation from
the viewpoint of China’s managerial labor market convergence towards global pay standards.
Some explanatory variables may have the same effect, regardless of the selected perspective. For
example, the negative association between state or legal person shareholding and CEO compensation
is deemed to hold in both views. Other explanatory variables, e.g. CEO shareholding, have
been hypothesized to have opposite effects depending on the chosen perspective. The sign and
significance of the empirical relation between CEO compensation and the explanatory variables
thus determine the relevance of each perspective.
11 Stock options plans started to be adopted as part of executive compensation packages from 2003, when the China
Securities Regulatory Commission (CSRC) picked two pilot firms to test run a stock option plan (Source: International
Finance News, 28 April 2003).40 D. Li et al. / Research in International Business and Finance 21 (2007) 32–49
3. Data and methodology
3.1. Data source and description
Our data come from the China Stock Market and
Accounting Research (CSMAR) database
and the China Corporate Governance Research (CCGR) database. The first database provides
financial information of listed companies. The second contains information on CEO compensation,
board composition and the percentage of shares held by the top 10 shareholders
for the pe
本论文由英语论文网提供整理,提供论文代写,英语论文代写,代写论文,代写英语论文,代写留学生论文,代写英文论文,留学生论文代写相关核心关键词搜索。