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Subnational institutional contingencies and executive pay dispersion

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  • Lerong He

    () (Fuzhou University
    State University of New York at Brockport)

  • Junxiong Fang

    () (Fudan University)

Abstract

Abstract This paper investigates the impact of subnational institutional contingencies on executive pay dispersion structure and the relationship between pay dispersion and firm performance. Using executive compensation data on Chinese listed firms between 2000 and 2011, we find that executive pay dispersion is significantly lower in state-owned enterprises (SOEs), while is significantly higher in cross-listed firms and to a smaller degree in firms located in developed regions. There is also evidence that executive pay dispersion is smaller during the voluntary compensation disclosure period. After controlling for endogeneity of pay determination, we find that executive pay dispersion is positively associated with firm performance. In addition, the positive link between executive pay dispersion and firm performance is stronger in non-SOEs than in SOEs, and stronger in firms located in more developed regions than those not. Our findings are also robust to alternative measures of pay dispersion and firm performance.

Suggested Citation

  • Lerong He & Junxiong Fang, 2016. "Subnational institutional contingencies and executive pay dispersion," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 371-410, June.
  • Handle: RePEc:kap:asiapa:v:33:y:2016:i:2:d:10.1007_s10490-015-9429-9
    DOI: 10.1007/s10490-015-9429-9
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