Abstract
The current literature documents that executives are rewarded for performance increases but are not penalized to the similar extent for performance decreases, especially it seems to be supported in China more strongly. However, in contrast with current literature, we find no significant asymmetry in pay-performance sensitivity (PPS) of executives in China. Drawing on the insights of managerial power and principal-agent theory, taking the Chinese listed manufacturing companies over the year of 2011-2013 as the research sample, the paper investigates the existence of stickiness of PPS of executives at present. By adopting the method of multiple regression linear analysis based on OLS, empirical analysis has proved that though managerial power still has a negative manipulation effect on executive PPS to some degree no matter how firm performance changes, executive PPS always keeps being equivalently positive and thus the asymmetry in executive PPS has disappeared statistically for Chinese listed manufacturing companies. It can be concluded that corporate governance quality, often heavily underestimated in China by both scholars and business circles, has realized substantial improvements, and the monitoring and decision-making role of the shareholders and the board has been growing steadily. Limitations and future research focuses are provided.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
