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Politically connected CEOs, firm performance, and CEO pay

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  • Wu, Huiying
  • Li, Sihai
  • Ying, Sammy Xiaoyan
  • Chen, Xuan

Abstract

This study examines the role of executive political connections in shaping executive compensation strategies in private Chinese firms, given the importance of political connections in securing political legitimacy and government-controlled resources in China. Our results show that the political connections of CEOs have a positive impact on both firm performance and CEO pay, and that this impact is stronger in less-developed regions. Further analyses indicate that, for CEOs with local political connections, the positive impact is not affected by regional economic development. Our findings reveal the importance of CEOs' political connections and demonstrate that such connections play a role in determining executive compensation.

Suggested Citation

  • Wu, Huiying & Li, Sihai & Ying, Sammy Xiaoyan & Chen, Xuan, 2018. "Politically connected CEOs, firm performance, and CEO pay," Journal of Business Research, Elsevier, vol. 91(C), pages 169-180.
    • Handle: RePEc:eee:jbrese:v:91:y:2018:i:c:p:169-180
    DOI: 10.1016/j.jbusres.2018.06.003
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