Publication Type
Book Chapter
Version
acceptedVersion
Publication Date
12-2015
Abstract
We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible ‘stewards’ rather than ‘agents’ of the state. We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets. Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform. In a social welfare perspective, such compensation stimulates not the maximization of shareholder value but the preservation of the state’s interests.
Keywords
State-stewardship view, agency theory, executive compensation, political connections
Discipline
Asian Studies | Corporate Finance | Human Resources Management
Research Areas
Finance
Publication
Political economy of Chinese finance
Editor
J. Jay Choi; Michael R. Powers; Xiaotian Tina Zhang
First Page
39
Last Page
91
ISBN
9781785609589
Identifier
10.1108/S1569-376720160000017009
Publisher
Emerald
City or Country
Bingley
Citation
Hao LIANG; RENNEBOOG, Luc; and SUN, Sunny Li.
A state-stewardship view on executive compensation. (2015). Political economy of Chinese finance. 39-91.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5006
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1108/S1569-376720160000017009