Manager or Politician? Effects of CEO Pay on the Performance of State-Controlled Chinese Listed Firms

Abstract

We examine the effects of chief executive officer (CEO) pay on two performance outcomes for central government-controlled Chinese listed firms: financial performance (return on assets, which is associated with the interests of all shareholders) and political performance (job creation, which reflects a primary objective of the controlling owner, the state). We posit that China’s mixed economy places state-owned enterprise (SOE) executives on dual career tracks—business and politics—and their career interests are differentially aligned with the divergent interests of minority shareholders and the state, respectively, depending on the firm’s position in the corresponding enterprise group. Based..