Risk-based Performance, Nature of Property and Executive’s Steady Compensation: Evidence from Chinese Corporations

摘要

In this paper, we analyze the steadiness of executive compensation relative to the financial performance of Chinese enterprises. We dissociate the firm’s operating performance and risk-based performance (changes in firm’s fair value) and we examine separately the steadiness of executive compensation relative to each portion of a firm’s performance. Our results show that in China, executive compensation is somewhat steady relative to the firm’s performance and more particularly to the firm’s risk-based performance. Our results also suggest that executive compensation is relatively steadier in the Chinese state-owned enterprises and, more particularly, in the firms controlled by local (provincial) governments.