Executive pay restrictions, political promotion, and firm efficiency: Evidence from China

IF 4.8 2区 经济学 Q1 BUSINESS, FINANCE
Wentao Li , Xiaoke Wang , Lisheng Yu
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引用次数: 0

Abstract

Using the mandatory reform in executive pay restrictions within Chinese state-owned enterprises (SOEs) as a quasi-natural experiment, we investigate the effects of compensation incentives and political promotion on firm efficiency. Our difference-in-differences analyses reveal that firm efficiency significantly decreases following the reform, and political promotion can attenuate this negative association. Firm risk-taking is a potential mechanism underlying this observed phenomenon. The negative relationship and mitigation effect are more pronounced for central SOEs and commercial class II SOEs. Furthermore, these findings exhibit variations based on distinctive attributes in compensation structures, CEO characteristics, and political promotion ranks. Overall, our study underscores the complementary roles of explicit and implicit incentives within SOEs, providing a strong rationale for government regulation and reform of executive compensation.
高管薪酬限制、政治晋升与公司效率:来自中国的证据
我们将中国国有企业高管薪酬限制的强制性改革作为一个准自然实验,研究了薪酬激励和政治晋升对企业效率的影响。我们的差分分析表明,改革后企业效率会显著下降,而政治晋升可以削弱这种负相关。企业承担风险是这一现象的潜在机制。中央国有企业和商业二级国有企业的负相关关系和缓解效应更为明显。此外,这些发现因薪酬结构、首席执行官特征和政治晋升级别的不同属性而有所差异。总之,我们的研究强调了国有企业内部显性和隐性激励机制的互补作用,为政府监管和改革高管薪酬提供了有力的依据。
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来源期刊
Pacific-Basin Finance Journal
Pacific-Basin Finance Journal BUSINESS, FINANCE-
CiteScore
6.80
自引率
6.50%
发文量
157
期刊介绍: The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.
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