posted on 2015-02-12, 09:17authored byAmon Chizema, Xiaohui Liu, Jiangyong Lu, Lan Gao
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.
Funding
Leverhulme Trust (RPG-160)
History
School
Business and Economics
Department
Business
Published in
Strategic Management Journal
Volume
36
Issue
6
Pages
890-906
Citation
CHIZEMA, A. ... et al., 2015. Politically connected boards and top executive pay in Chinese listed firms. Strategic Management Journal, 36 (6), pp. 890-906.
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/
Acceptance date
2014-02-22
Publication date
2014-04-27
Notes
This is the peer reviewed version of the following article: CHIZEMA, A. ... et al., 2015. Politically connected boards and top executive pay in Chinese listed firms. Strategic Management Journal, 36 (6), pp. 890-906, which has been published in final form at http://dx.doi.org/10.1002/smj.2253. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.