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Top Management Team Power in China: Measurement and Validation

Author

Listed:
  • Bin Ke

    (Department of Accounting, Business School, National University of Singapore, Singapore 119245)

  • Xinshu Mao

    (Department of Accounting, Business School, Beijing Technology and Business University, 100048 Beijing, People’s Republic of China)

  • Bin Wang

    (Department of Finance, Business School, Beijing Technology and Business University, 100048 Beijing, People’s Republic of China)

  • Luo Zuo

    (Samuel Curtis Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853)

Abstract

We propose and validate a comprehensive measure of power for the top management teams (TMTs) of publicly listed Chinese firms. We show that our measure is positively associated with the four power dimensions developed by prior research for U.S. firms as well as three Asia-relevant power dimensions, including political capital, seniority, and gender. We find that our TMT power measure is a valid proxy for TMT power for both state-controlled firms and non-state-controlled firms. We also compare our TMT power measure with one alternative TMT power proxy based on executive compensation and find no evidence that the alternative proxy is better than our measure in capturing TMT’s true power. Further, we provide evidence that the divergence between our power proxy and the power proxy based on executive compensation reflects nonmarket institutional forces in China and has important implications for corporate outcomes.

Suggested Citation

  • Bin Ke & Xinshu Mao & Bin Wang & Luo Zuo, 2021. "Top Management Team Power in China: Measurement and Validation," Management Science, INFORMS, vol. 67(10), pages 6602-6627, October.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:10:p:6602-6627
    DOI: 10.1287/mnsc.2020.3798
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    References listed on IDEAS

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    Cited by:

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    2. Ziyan Tan & Xiaobo Wu & Ruhui Chu, 2024. "Impact of Pay Gap on Innovation Performance: The Moderating Role of Top Management Team Diversity," Sustainability, MDPI, vol. 16(17), pages 1-15, August.
    3. Yan, Weichen & Cai, Zhipeng & Yang, Aishu, 2023. "Leading the charge: The impact of executives with R&D backgrounds on corporate digital transformation," Finance Research Letters, Elsevier, vol. 56(C).
    4. Wu, Qingyang, 2024. "Power play in carbon trading market: How status of executives with R&D background incentives companies’ low-carbon innovation," Energy Policy, Elsevier, vol. 188(C).

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