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How can wage restriction order affect a firms' financialization?

Author

Listed:
  • Xie, Yan
  • Zhang, Juan
  • Zhang, Kun
  • Ren, Yixin

Abstract

This paper employs Chinese A-share listed firms from 2011 to 2022 to investigate the correlation between the reform of the remuneration system, represented by the Wage Restriction Order, and the process of corporate financialization. The results emphasize that implementing the Wage Restriction Order can impede business financialization in terms of willingness and magnitude. Moreover, the Wage Restriction Order hinders corporate financialization by optimizing executives' compensation structure and reducing managers' short-sightedness. The diverse impacts of the Wage Restriction Order on corporate financialization arise from the labor costs mechanism.

Suggested Citation

  • Xie, Yan & Zhang, Juan & Zhang, Kun & Ren, Yixin, 2025. "How can wage restriction order affect a firms' financialization?," Finance Research Letters, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015356
    DOI: 10.1016/j.frl.2024.106506
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