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Conyon, Martin J.; He, Lerong --- "Executive Compensation and Pay for Performance in China" [2012] ELECD 618; in Thomas, S. Randall; Hill, G. Jennifer (eds), "Research Handbook on Executive Pay" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Executive Pay

Editor(s): Thomas, S. Randall; Hill, G. Jennifer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803960

Section: Chapter 20

Section Title: Executive Compensation and Pay for Performance in China

Author(s): Conyon, Martin J.; He, Lerong

Number of pages: 21

Extract:

20 Executive compensation and pay for performance
in China1
Martin J. Conyon and Lerong He


1 INTRODUCTION

We investigate executive compensation in China, the world's second largest economy.
Relative to Western economies, empirical studies on CEO pay in China are scarce. From
the 1990s Chinese firms began the transition process from state owned enterprises (SOEs)
to modern enterprises. China has two stock exchanges, the Shanghai and Shenzhen Stock
Exchanges. The Shanghai Stock Exchange (SSE) started operation in December, 2000.
By the end of December 2009, there were 888 listed companies and a market capitaliza-
tion of 18,465 billion RMB (or about US$2,715 billion). The Shenzhen Stock Exchange
was founded in December, 2001. By the end of December 2009, a total of 830 firms were
listed with a market capitalization of 5,928 billion RMB (or about US$872 billion). From
an executive pay perspective, there are several important questions to address. Are
Chinese executives paid in the same way as Western executives? Are the drivers of execu-
tive pay, such as firm performance and size, as important in socialist China as in the West?
How does the Chinese state affect the provision of incentives in Chinese firms? To answer
these and related questions we review the evidence amassed in the recent extant literature.
In addition, we provide some further evidence on the determinants of executive pay in
Chinese listed firms.
The institutional context of China is radically different from Western economies.
China is a socialist economy ...