Top Management Pay In China

In this paper, the authors investigate some aspects of top management pay in China's listed firms. While China has embraced many capitalist practices it still retains some vestiges of socialism and this has an impact on the way business executives are rewarded. In particular, the Chinese government wants to maintain social harmony and it believes that differences in pay between managers and workers should be relatively low. They find that the pay disparities between top managers and their employees are positively related to a firm's performance. Thus it appears that any deviation away from a manager-worker compensation norm has to be justified by superior firm performance. In contrast, the perquisites that many managers receive are not related to performance.