Executive perks: Compensation and corporate performance in China

Abstract

Executive compensation, Perks, Non-cash compensation, Perquisites, Firm performance,

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future

“…For example, the relation between state ownership and executive pay is either negative (Adithipyangkul & Zhang, 2011;Conyon & He, 2011Firth et al, 2007) or insignificant Firth, Fung, & Rui, 2006a;Markoczy et al, 2013). The same is true about the relation between state ownership and executive turnover.…”

Social network contingency, symbolic management, and boundary stretching

“…This study is the first to show that a firms' choice to stretch the boundaries of its practices is contingent on its structural position within its social network. Our focus on this contingency role of social networks distinguishes our approach from previous work that has tended to focus on the diffusion of new practices (Adithipyangkul et al ., 2011;Davis, 1991;Fligstein, 1985;Haunschild, 1993;Herrbach, 2005;Snyder et al ., 2009). While existing research has uncovered the mechanisms though which interlocks facilitate the adoption of new practices, it has not yet addressed the effect of firms' structural positions on boundary stretching.…”

“…Although boards can appoint CEOs and decide their pay, breaching the implicit norms of seniority and (near) equality with workers can easily trigger public outrage concerning 'unfair' income distribution. This outcry can trigger the intervention of officials (Adithipyangkul et al ., 2011;Firth, Fung, and Rui, 2006). One form of state intervention is to manipulate access to state-controlled resources by punishing firms that deviate too significantly from the state's political and socio-economic priorities, including the goal to maintain social harmony and avoid public outrage (Firth et al ., 2010).…”

“…In our theoretical framework (see Figure 1), we argue that in China the higher CEO compensation that a firm pays the more it is stretching boundaries. This is because CEO compensation in China tends to be low under historic and institutionally embedded norms centered on income equality fostered by socialism (Adithipyangkul, Alon, and Zhang, 2011;Sun, Zhao, and Yang, 2010). The higher a CEO's compensation, the more likely that it will trigger interventions from officials who fear public outrage (Firth, Leung, and Rui, 2010).…”

“…Social network theorists claim that social networks can be used as a mechanism for cooptation (Mizruchi, 1996). Our focus on the effect of a firm's structural position within corporate interlocks on boundary stretching practices distinguishes our approach from previous studies on interlocks that focus on the diffusion process of new practices within social networks (Adithipyangkul et al ., 2011;Davis, 1991;Fligstein, 1985;Haunschild, 1993;Herrbach, 2005;Khanna and Thomas, 2009;Snyder, Priem, and Levitas, 2009).…”