Zheng, Z., LA. Zhou, Y. Sun , C. Chen——Review of Development Economics: Executive Compensation and Legal Investor Proction
时间:2016-10-23
This paper seeks to relate the increases in executive compensation observed in China to improvement of the legal environment. We build a simple model and demonstrate that improvement in legal investor protection reduces the manager's private benefits of control; in order to make the managerial incentives compatible, some of the forgone private benefits have to be compensated in the form of increased executive pay. Using a large dataset on Chinese listed corporations, we find strong evidence that