2021
DOI: 10.1007/s43546-021-00160-8
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The effect of firm performance on CEO compensation: the moderation role of SOE reform

Abstract: As corporations expand, the owners (principals) delegate managers (agents) to manage their wealth on their behalf. Ceding the management authority to others means shareholders must institute mechanisms that keep their interests aligned with those of managers. One of such corporate governance mechanism that helps with the interest alignment goal is the compensation of Chief Executive Officers (CEOs). Although there are some previous studies on CEOs' compensation, results from these studies are mixed. Most corpo… Show more

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Cited by 6 publications
(1 citation statement)
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“…This work is situated within the fabrics of three major theories, namely, agency theory, managerial power theory, and law and finance theory. First, following the divorce of managerial responsibility from possession in listed firms, agency theory stresses the importance of executive compensation as an internal corporate governance mechanism that matches shareholders' and professional managers' interests (Chukwuma et al, 2021; Wang et al, 2021; Yang et al, 2020). To prevent exploitation of avalanche of information gap which might be to the disadvantage of dispersed shareholders, the principal‐agent theory posits that executive compensation of professional managers should be tied and benchmarked to observable firm performance of listed firms (Ko et al, 2020; Tee, 2021).…”
Section: Literature Reviewmentioning
confidence: 99%
“…This work is situated within the fabrics of three major theories, namely, agency theory, managerial power theory, and law and finance theory. First, following the divorce of managerial responsibility from possession in listed firms, agency theory stresses the importance of executive compensation as an internal corporate governance mechanism that matches shareholders' and professional managers' interests (Chukwuma et al, 2021; Wang et al, 2021; Yang et al, 2020). To prevent exploitation of avalanche of information gap which might be to the disadvantage of dispersed shareholders, the principal‐agent theory posits that executive compensation of professional managers should be tied and benchmarked to observable firm performance of listed firms (Ko et al, 2020; Tee, 2021).…”
Section: Literature Reviewmentioning
confidence: 99%