Risk, Performance and Executive Compensation: A Simultaneous Approach on China Listed Firms
Journal Title: Journal of Economics, Management and Trade - Year 2017, Vol 19, Issue 1
Abstract
Corporatization and listing of State Owned Enterprises (SOEs) and the adoption of profit objectives is meant to accelerate growth and encourage innovation and investment. This study assess the relation between executive incentives, risk-taking and firm performance. I applied three-simultaneous-equation using 3 Stage least Square (3SLS) method in which vega, delta and firm risk/performance are all treated as endogenous variables and are jointly determined. I find positive relationship between CEO compensation and performance. Moreover, empirical results show that vega is an incentive compensation measure that encourage managers risk-taking behavior, while delta is party of compensation that could align the interests between firm and shareholders. This study is an innovative study to foster a better understanding of compensation structure in China and has important implications for China’s current privatization reforms.
Authors and Affiliations
Xiaolou Yang
Keywords
Related Articles
- EP ID EP319849
- DOI 10.9734/JEMT/2017/35994
- Views 79
- Downloads 0
Cognitive Analysis and Modeling of Innovation Potential
Aim: The main aim of the research is to develop cognitive model for innovation potential evaluation. Study Design: Empirical research of financial, statistic and management reports of enterprises dated 2012 and 2015, an...
Methodological Principles of Formation of Tariffs for Railway
Aim: Aim of this paper is to research the approaches that affect the efficiency of government regulation of tariff for railway transportation industry in both sectors in scientific and methodological way. Study Design:...
An Evaluation of Domestic Gas Utilization on the Nigerian Economy
Natural gas has continued to experience high patronage over the years, largely due to its efficiency as an energy source. Economic growth literature posits that there is a relationship between energy consumption and grow...
Accountants’ Perceptions of IPSAS Application in Nigerian Public Sector Financial Management and Reporting
This study examined accountants’ perception of IPSAS acceptance in Nigerian public sector financial management and reporting. There are conflicting or divergent views as to what will accrue or what Nigeria stand to gain...
The Intervening Effect of Customer Satisfaction in the Relationship between Corporate Social Responsibility and Reputation and Credibility: Case of Credit Departments of Taiwan's Farmer Association
There has been a remarkable transformation in the business world over the last few decades with the concept of corporate social responsibility (CSR) having been universally embraced. CSR is prolific and paradoxical busin...