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Relative earnings and firm performance: Evidence from publicly-listed firms in China, 2005–2012

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  • Bai, Peiwen
  • Cheng, Wenli

Abstract

This paper studies the relationship between three measures of relative earnings and firm performance based on data of 664 listed manufacturing companies in China over the period 2005–2012. It finds that a firm’s financial performance was (1) negatively associated with the capital to labor earnings ratio in the firm; (2) negatively associated with regional average wage relative to the firm’s average wage; and (3) positively associated with the earnings of high-level managers relative to ordinary workers. It also finds that the effects of relative earnings on firm performance differed across regions, industry characteristics and firm ownership structures, and over different time periods.

Suggested Citation

  • Bai, Peiwen & Cheng, Wenli, 2020. "Relative earnings and firm performance: Evidence from publicly-listed firms in China, 2005–2012," International Review of Economics & Finance, Elsevier, vol. 66(C), pages 279-290.
  • Handle: RePEc:eee:reveco:v:66:y:2020:i:c:p:279-290
    DOI: 10.1016/j.iref.2019.11.005
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    More about this item

    Keywords

    Relative income share of capital and labor; Relative earnings of management and workers; Relative wage; Firm performance in China; Capital share; Wage share; Management pay; Financial performance; Listed companies in China;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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