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Legislative political connections and CEO compensation in China

Author

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  • Russell Fralich

    (HEC Montreal)

  • Hong Fan

    (Saint Mary’s University)

Abstract

In this paper, we argue that the characteristics of ties represent a boundary condition of resource-dependency theory for explaining the benefits of political connections. We support this contention with a study of the linkage between CEO compensation and two types of Chinese legislative political ties: the one to the National People’s Congress (NPC) and the other to the Chinese People's Political Consulative Committee (CPPCC). We find that political ties do not necessarily provide access to critical resources and guarantee higher compensation. Our results suggest that the two legislative political ties represent distinct sources of managerial power resulting in different relationships with CEO pay.

Suggested Citation

  • Russell Fralich & Hong Fan, 2018. "Legislative political connections and CEO compensation in China," Asian Business & Management, Palgrave Macmillan, vol. 17(2), pages 112-139, April.
    • Handle: RePEc:pal:abaman:v:17:y:2018:i:2:d:10.1057_s41291-018-0034-x
    DOI: 10.1057/s41291-018-0034-x
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