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Government intervention and executive compensation contracts of state-owned enterprises: empirical evidence from China

Author

Listed:
  • Ningyue Liu
  • Liming Wang
  • Min Zhang
  • Wen Zhang

Abstract

This paper attempts to examine the impact of government intervention on executive compensation contracts by employing the data of listed companies in the Chinese equity market. The results show that redundancy burden caused by government intervention significantly reduces the compensation-performance sensitivity of executives in state-owned enterprises (SOEs), increases the level of compensation stickiness and leads to more executive perks. However, there is no evidence to support this conclusion in non-SOEs. Our results indicate that government has great responsibility for redundancy in SOEs and has a significant impact on the design of executive compensation contracts, but has limited impact on that of non-SOEs. Therefore, the impact of redundancy burden on executive compensation contracts is different between SOEs and non-SOEs. Our findings have important implications for the relationship between property rights and corporate performance, the formation mechanism of redundancy, and the impact of redundancy burden on executive compensation contracts.

Suggested Citation

  • Ningyue Liu & Liming Wang & Min Zhang & Wen Zhang, 2012. "Government intervention and executive compensation contracts of state-owned enterprises: empirical evidence from China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(4), pages 391-411, August.
    • Handle: RePEc:taf:jocebs:v:10:y:2012:i:4:p:391-411
    DOI: 10.1080/14765284.2012.724983
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    Cited by:

    1. Xiaoyi Ren & Xing Liu & Zongtao Tian, 2020. "Excess perks in SOEs: evidence from China," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 34(2), pages 152-165, November.
    2. Manh Hoang Nguyen & Thi Quy Vo, 2022. "Residual State Ownership and Firm Performance: A Case of Vietnam," JRFM, MDPI, vol. 15(6), pages 1-28, June.
    3. Ali Saleh Ahmed Alarussi, 2021. "Effectiveness, Efficiency and Executive Directors’ Compensation Among Listed Companies in Malaysia," SAGE Open, , vol. 11(4), pages 21582440211, October.

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