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Location and the Design of Executives’ Compensation in China


Location and the Design of Executives’ Compensation in China

Sun, Yi (2019) Location and the Design of Executives’ Compensation in China. Masters thesis, Concordia University.

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This article tries to find the effect of a firm’s location on executives’ compensation in China, especially for non-state-owned listed enterprises. Based on the data from 2013-2017, I find that there are significant gaps between executives’ remuneration of companies in smaller cities and that of companies in mega cities. Companies in mega cities pay 33.5% more in equity and 28.4% more in cash to their top managers. After controlling for the cost of living, the gaps are narrowed. Executives in smaller cities earn only 3.7% less in equity compensation and 3.8% more in cash compensation. I also find that top managers in firms in smaller cities have lower pay-for-performance sensitivity. However, the influence of firms’ location on equity-compensation-for-performance sensitivity is insignificant. This result may have some implications for the shareholders of companies in smaller cities as they can increase the proportion of equity-based compensation to connect their interests and executives’ interests better.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Thesis (Masters)
Authors:Sun, Yi
Institution:Concordia University
Degree Name:M. Sc.
Date:19 May 2019
Thesis Supervisor(s):Ullah, Saif
Keywords:Executives’ compensation, Pay-for-performance sensitivity, Firm location, China
ID Code:985493
Deposited By: Yi Sun
Deposited On:19 Dec 2019 14:27
Last Modified:19 Dec 2019 14:27


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