Politically connected boards and top executive pay in Chinese listed firms

Research output: Contribution to journalArticlepeer-review

Authors

Colleges, School and Institutes

External organisations

  • Department of Strategic Management; Guanghua School of Management, Peking University; Beijing China
  • Loughborough University

Abstract

Drawing on social comparison theory, this study examines the relationship between politically connected boards and top executive pay. Moreover, given the socialist orientation of China, tests are also carried out to establish the relationship between politically connected directors and pay dispersion across the firm. We find a negative association between politically connected boards and top executive pay. We also find that politically connected boards are negatively associated with pay dispersion, i.e., the higher the number of political directors on the board the smaller the gap between top executive pay and average employee pay. Finally, our study shows that politically connected directors weaken the pay-performance link. These findings have important theoretical, policy, and managerial implications.

Details

Original languageEnglish
Pages (from-to)890-906
Number of pages17
JournalStrategic Management Journal
Volume36
Issue number6
Early online date7 Mar 2014
Publication statusPublished - Jun 2015

Keywords

  • top executive pay, politically connected directors, China, social comparison theory, corporate governance