Stockholm School of Economics Asia Working Paper Series
Anders C. Johansson
CEO Incentives in Chinese State-Controlled Firms
() and Xunan Feng
Abstract: This paper investigates CEO incentives in Chinese
state-controlled firms. We find that firm performance has a positive effect
on CEO compensation. We also find that firm performance is positively
associated with CEO promotion and negatively associated with CEO turnover.
CEOs for state-controlled firms thus face significant incentives, not only
in monetary form, but also in terms of career prospects. These results
suggest that the CEO labor market in the Chinese state sector exhibits
characteristics similar to those of managerial labor markets in developed
countries, at least during our sample period. Moreover, we show that local
institutions have a significant impact on the relationship between CEO
incentives and firm performance, with performance having a larger effect on
CEO compensation, promotion and turnover in regions characterized by
stronger institutions. Overall, our results demonstrate that firm
performance is associated with CEO incentives also for state-controlled
firms in China, suggesting that there is a functioning labor market for top
managers in the Chinese state sector.
Keywords: State-controlled firms; Managerial labor market; Performance; CEO compensation; CEO promotion; CEO turnover; China; (follow links to similar papers)
JEL-Codes: G30; G38; J30; M52; P30; (follow links to similar papers)
57 pages, September 6, 2013
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