| Summary: | 碩士 === 靜宜大學 === 財務金融研究所 === 98 === This article examines the relationship between senior managers’ compensation and firm performance in China’s listed firms during 2001 to 2005, and also the role of ownership structure on this relationship. We find senior managers’ compensation significantly shows positive relation to firm performance, and this indicates that incentive pay scheme is gradually being used to motivate top managers after the reform of corporate privatization at the beginning of 1990s. Our results further find that firms with controlling shareholder of foreign investors tend to link their senior managers’ pay to firm performance more closely than the other types of control, mainly under control of the state government. We conclude that ownership structure definitely plays a key role not only in determining the senior managers’ pay but also in the pay to performance relationship in China listed firms. This conclusion is robust across different models by using OLS estimation or Panel analysis. The results of this study help understand the importance of ownership structure in the linkage of senior managers’ pay to firm performance in the emerging market, especially for the country experiencing economic reforms from the central planning system.
Keywords: Ownership structure, Senior managers’ compensation, Firm performance, China’s listed firms
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