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The Impact of Executive Payment on Firm Performance of the Financial Enterprises in China

By Konstantinos Vasileiou, Ioannis Sotiropoulos, Georgios Georgakopoulos and Wenqian Zhou

Abstract

<p>Using a panel of Chinese commercial banks over the 2001-2009 period, this study explores the relationship between executive pay and performance, as well as, the comparison of pay-performance sensitivity between managers and directors. Several methods were employed to estimate the relation, with control variables of size and ownership, based on alternative measures of performance. Our analyses revealed that the performance of non-performing loan ratios and ROE have significant effect on director’s compensation. On the contrary, no relation between bank performance and managers compensation was found, and neither any impact of compensation changes on performance. Moreover, according to our results the state control ownership can lower the pay-performance sensitivity. As a conclusion, this research supports that government regulations on bank performance rating and executive compensation are necessary.</p

Topics: LCC:Social sciences (General), LCC:H1-99, LCC:Social Sciences, LCC:H, DOAJ:Social Sciences
Publisher: Canadian Center of Science and Education
Year: 2011
DOI identifier: 10.5539/ass.v7n8p65
OAI identifier: oai:doaj.org/article:c36f69efabf24cba916d0b9950bd49df
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