Publication Type

Book Chapter

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

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1108/S1569-376720160000017009

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