We apply sensitivity of executive compensation to firm performance as an effective measurement of corporate governance to examine the bonding mechanism among the cross‐listed Chinese firms between 2005 and 2017. Our sample covers the nonfinancial firms listed on both China and Hong Kong stock exchanges (AH‐share firms) and firms in China only (A‐share firms). We find that AH‐share firms have much higher sensitivity of executive compensation to firm performance than A‐share firms. However, the bonding effect only exists when executive cash compensation and firm accounting performance are considered. Executive compensation on stock return, chief executive officer turnover on firm accounting performance, or chief executive officer turnover on stock market performance, all demonstrate no bonding effect. The results are attributed to institutional environment in which executive compensation is solely dependent on accounting profits among Chinese firms, and the A‐share market offers weak investor protection. We also find that both legal and reputational bonding effects work on improved governance of AH‐share firms, although such effects are highly dependent on specific market mechanisms including that of firm executives. Our findings may contribute to current bonding literature and have policy implications on future state‐owned enterprise reforms.
This paper presents a longitudinal interpretive case study on the development of healthcare costing in China over the period 2002 to 2015. Adopting a middle-range theory lens, the study explores dynamic interactions in the use of cost information among societal institutions and organizations. It reports the successful internalization of costing systems in public hospitals in Beijing, which supports the effectiveness of a hybrid steering mechanism combining both transactional and relational features; however, such successful internalization does not indicate the success of steering the lifeworld of institutions and organizations towards change.Notably, hospitals' responses to steering alter over time, from passive absorption to active manipulation, revealing how cost information may underpin hospital beliefs in marketization. At an institutional level, the paper provides empirical evidence for relational steering among societal institutions, where a reaction of 'rebuttal' is observed. It offers insights on how accounting can be a powerful tool in legitimizing such rebuttal, while keeping political considerations as hidden agendas. The findings suggest the importance of understanding lifeworld complexity at both societal and organizational levels, and cross-institutional collaboration in using accounting as a steering mechanism. The findings have important policy implications for public sector reform, both in China and worldwide.
Purpose -The purpose of this paper is to discuss the governance mechanism of overcoming or solving three problems: cooperation problem, coordination problem and appropriation problem. Also to raise the value chain cost efficiency and to elevate the value chain competitive advantage. Design/methodology/approach -The methodology is the experimental study. The authors design an experience simulating the transaction process across firms to explore the separate and joint governance effects of trust and incentive on the cost of value chain. Findings -According to the experimental results it is found that the high level of trust between firms and the incentive based on the joint interests of value chain can effectively mitigate or avoid the cooperation, coordination and appropriation problems, and thus have significant governance effects on the cost of value chain. Incentive is out of effect when a much lower level of trust across firms exists, which reflects that there is a significant complementary relationship between trust and incentive mechanisms.Research limitations/implications -The research limitation is that the practical experience and the cognition of experimenters of the researchers will influence the conclusion of the experiment, so the research on the influences of other factors must be deepened. Originality/value -The paper's value is in setting out a value chain cost management theory frame, demonstrating trust and incentive as two kinds of governance mechanism in the value chain cost management mechanism, adopting experiment method to verify the above theory, and providing the relevant behavior evidence for future research.
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