TY - JOUR
T1 - Deferred Executive Compensation Policies in Chinese State-owned Enterprises
AU - Ju, Min
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PY - 2007
Y1 - 2007
N2 - Since the commencement of industrial reform in China, most Chinese state‐owned enterprises have adopted a deferred executive compensation policy to provide incentives for their management teams. However, the effectiveness of such a policy needs to be evaluated. In this paper, we specify a model of deferred executive compensation policy, in which the compensation for executives is contingent on firms' future revenue. The model suggests that under deferred executive compensation policies, managers exhibit an increasing level of effort in every period. Furthermore, the deferred compensation policy encourages managers to make long‐term investments, which might generate revenue even after the termination of managerial contracts.
AB - Since the commencement of industrial reform in China, most Chinese state‐owned enterprises have adopted a deferred executive compensation policy to provide incentives for their management teams. However, the effectiveness of such a policy needs to be evaluated. In this paper, we specify a model of deferred executive compensation policy, in which the compensation for executives is contingent on firms' future revenue. The model suggests that under deferred executive compensation policies, managers exhibit an increasing level of effort in every period. Furthermore, the deferred compensation policy encourages managers to make long‐term investments, which might generate revenue even after the termination of managerial contracts.
UR - https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1749-124X.2007.00078.x
M3 - Article
VL - 15
JO - China & World Economy
JF - China & World Economy
ER -